Equal Pay
	 — 
	Question

Baroness Afshar: To ask Her Majesty's Government what steps they are taking to ensure pay equality between men and women.

Baroness Royall of Blaisdon: My Lords, the forthcoming equality Bill contains a number of measures to improve pay transparency, which will improve pay equality. In addition, the Government are investing £25 million to provide skills development and support for women, in response to the Women and Work Commission recommendations on skills training, and in April 2009, we are extending the right to request flexible working to the parents of children up to 16.

Baroness Afshar: My Lords, I thank the noble Baroness, Lady Royall, for this very helpful measure. I am very pleased about equal pay for flexible work. However, will the Government consider the payment of wages for domestic work, which could add to the existing success of family allowance in the knowledge that this kind of money gets spent immediately and locally? It would have a great multiplier effect and would not counter equal pay in any way.

Baroness Royall of Blaisdon: My Lords, that is an interesting idea which has been around for many years, but the Government do not agree with it. It might entrench the position of women as domestic servants, because it is women who do the housework—

Noble Lords: Oh.

Baroness Royall of Blaisdon: Forgive me, my Lords, but in the majority of cases, it is still women who do the housework. It is important that money goes to women, as in the case of child benefit, but we do not agree that it would be good to have wages for housework.

Baroness Crawley: My Lords, given that equal pay is an issue not just of social justice but also of economic productivity, what assurances can my noble friend give that the good work of the Government on equality will not be undone by recession?

Baroness Royall of Blaisdon: My Lords, that is a very important question. Of course the recession has an impact on us all, men and women alike. We do not have any firm data at the moment, but it is clear that because women are employed disproportionately in the retail and financial services sectors, the recession is likely to have a profound effect on them. We are looking at this across government, with the establishment of the National Economic Council, and it is important that we focus on women in this economic downturn.

Lord Tebbit: My Lords, will the noble Baroness say whether her legislation and her policies will do anything to rectify the gross imbalance of the sexes in the Crown Prosecution Service, where twice as many women as men are employed? What will she do about that to help these poor men who are being discriminated against?

Baroness Royall of Blaisdon: My Lords, that is an interesting point. In many professions and sections of our society, women do some jobs and men do others. It is part of the culture, but it is also part of our education; women and men do not know of the opportunities that are available to them. Therefore, we need more men to know about the opportunities in the Crown Prosecution and more women to know about opportunities in science.

Lord Lester of Herne Hill: My Lords, leaving aside, if I may, the gender imbalance in this House, is the Minister aware that one of the difficulties about equal pay at the moment is that there is no incentive for employers to carry out proper evaluations of their pay systems because if they do, and they find that there is sex discrimination, they will be liable for massive damages claims? Will the Government consider providing an incentive in the equal pay legislation, when they reform it, by having transitional protection for those employers who carry out a proper job evaluation, discover that there is unequal pay, want to move towards providing equal pay and need protection meanwhile against individual claims? That would provide a carrot for employers to do what they should be doing anyway.

Baroness Royall of Blaisdon: My Lords, as the noble Lord will know, we are still reflecting on various issues in relation to equal pay and the forthcoming equality Bill. I know that the Government have been speaking to the noble Lord about these issues, and we shall continue to do so.

Baroness Pitkeathley: My Lords, does my noble friend agree that, at a time of economic recession, it will be important, too, to monitor the public appointments system, since many women work in the public arena and more men may seek appointments in it if they are not able to find work in the commercial sector, thus disadvantaging women who want to work in that arena?

Baroness Royall of Blaisdon: Yes, my Lords, we certainly have to keep our eye on the public appointments system, which has not to date been resoundingly successful in ensuring that enough women are on publicly appointed bodies. We have to ensure that, in a downturn, we not only maintain the position of women on public bodies but increase their number.

Earl Ferrers: My Lords, is it a fact that female Members of the government Front Bench get a dress allowance? While one can see that this is an admirable thing, does the noble Baroness not think that it is rather unfair on the poor men, who do not have such an allowance, and can one not see the disadvantages of their not having a similar allowance?

Baroness Royall of Blaisdon: My Lords, at a time of economic recession, it would probably be remiss of me to say that it would be a jolly nice thing, but I can categorically say that we do not get a dress allowance.

Baroness Morris of Bolton: My Lords, one area where the pay gap is most stark is the City, usually because of bonuses. Given that the Government are now a substantial shareholder in a number of banks, how will they ensure that there is fair play in those institutions?

Baroness Royall of Blaisdon: My Lords, that is yet another interesting point. The Government of course have some responsibility here, but the Equality and Human Rights Commission is conducting a series of inquiries in sectors where inequality is clear, including in the financial sector. We look forward to hearing the results of those inquiries.

Lord Brooke of Sutton Mandeville: My Lords, is the Leader of the House aware that the only time that Her Majesty's Government were defeated on the Floor of the House of Commons during World War II was on an amendment moved by the first Viscount Eccles, which proposed that, after the war, female and male teachers should have equal pay? It was carried by one vote and reversed on a vote of confidence on Report by more than 400 votes. Is it not a sad reflection on Governments of both parties that, 65 years later, it should still be necessary to have such a Question as this on the Order Paper?

Baroness Royall of Blaisdon: My Lords, it is an enormously sad reflection. We have come some way; there is an enormous amount still to do. This Government have done a lot to enable more women to participate in the workforce, but not enough has been done. However, knowing the strong feelings on this matter on all sides of the House, I look forward to the support of all noble Lords for the forthcoming equality Bill.

Energy: Light Bulbs
	 — 
	Question

Lord Harrison: To ask Her Majesty's Government what is their position on the phasing out of 100- and 75-watt traditional light bulbs.

Lord Hunt of Kings Heath: My Lords, incandescent light bulbs waste 95 per cent of the energy that they use as heat. Phasing them out and replacing them with efficient alternatives can help to reduce emissions and energy bills. We are pleased that UK retailers and energy suppliers are voluntarily phasing out these lamps before European rules are introduced later this year.

Lord Harrison: My Lords, is my noble friend as incandescent as I am about the reduced brightness of these new lamps, which make life difficult for those with poor eyesight, about the poorer quality of the light, which renders the world a grey ineffectiveness, and about the concerns about safety associated with mercury release? Just who made these decisions and where were they made? Indeed, just how many politicians did it take to change a light-bulb policy?

Lord Hunt of Kings Heath: My Lords, it takes one Member of your Lordships' House to change a light bulb and 712 to debate the matter for endless hours. Of course, I understand the point that my noble friend raises, particularly about partially sighted people. We have been in, and are happy to continue, discussions with the RNIB and other organisations. Overall, the technology and quality of the new bulbs have improved enormously. For partially sighted people, there is the alternative of halogen look-alike bulbs.

Lord Lawson of Blaby: My Lords, will the Minister explain how it makes sense for the European Union to ban mercury thermometers because mercury is a health hazard but, at the same time, to force us to use these low-energy light bulbs, which have a great deal more mercury than mercury thermometers?

Lord Hunt of Kings Heath: My Lords, the noble Lord is not right on that. There is a small amount of mercury in the CFL lamps, but my understanding is that it is 1,500 times less than the amount in mercury thermometers.

Lord Lawson of Blaby: But there are more of them.

Lord Hunt of Kings Heath: My Lords, there may be more of them, but the element of hazardous waste is much smaller. As for the mercury processed in manufacturing, if you put the two together, there will be less mercury that comes out.

Lord St John of Bletso: My Lords, given the pollutants within compact fluorescent lights, are the Government actively looking at safer alternatives, such as LED lights?

Lord Hunt of Kings Heath: Yes, my Lords, there appears to be great potential in LED lights, not just because they do not need to use mercury, but because potentially they have a very much longer life even than the new energy-efficient lights. Researchers in the UK are very much involved in leading the field and we very much hope that we can see the new technology come on to the market within the next few years.

Lord Redesdale: My Lords—

Lord Taylor of Holbeach: My Lords—

Lord Davies of Oldham: My Lords, for a little light in a dark corner, it is the Lib Dems' turn.

Lord Redesdale: My Lords, perhaps I should start by saying how much we support the Government's move in changing to these new light bulbs, which must be one of the most positive moves that they have made recently on combating climate change. Has the Minister had any complaints from noble Lords about energy-saving light bulbs, considering that the Palace of Westminster has moved to energy-saving light bulbs as far as it can and has saved 61 per cent of its energy costs? Indeed, this Chamber is lit by energy-saving light bulbs—a fact that seems to have eluded most noble Lords. I know that certain noble Lords have difficulty with their eyesight, but I have not heard any complaints. Does the Minister agree that this should be shown as a shining example of the value of energy-saving light bulbs?

Lord Hunt of Kings Heath: My Lords, I have not had any complaints yet, but I intend to make myself scarce over the next few days.

Lord Taylor of Holbeach: My Lords, having heard the question from the Lib Dem Benches, I wonder whether the Minister is happy that the Government are carrying the British people with them on this issue. I have heard of noble Lords bulk-buying incandescent bulbs for the future. Do the energy-saving figures include the fact that, given the Newtonian physics of light bulbs, the heat lost through changing to the new type of bulbs means that people are spending more on heating their homes?

Lord Hunt of Kings Heath: My Lords, I welcome the noble Lord's question but, when we debate climate change in a few moments, the Government will no doubt come under criticism from the Benches opposite for not taking enough action. It is disappointing that the noble Lord is not prepared to support what has been a widely progressive measure. On the question, of course there are balances to be drawn, such as in balancing the environmental impact at the manufacturing stage with the energy saved when the bulbs are in use. There may be other balances. Overall, I have no doubt whatever that this not only reduces the use of energy but saves on householders' bills.

Lord Mawhinney: My Lords, I am sure that your Lordships' House is pleased to hear that the Government are talking to RNIB, but will the Minister give us more detail on the Government's proposals to accommodate the very elderly or those with genuine sight problems, who will be seriously disadvantaged and perhaps cut off entirely from the ability to read in the absence of the present light bulbs? I have a dual interest to declare. My mother is in her 90s and has difficulty reading; she has already expressed worry and concern to me about this development. I am also president of the Peterborough Association for the Blind.

Lord Hunt of Kings Heath: My Lords, I am sorry that any person should feel concerned about the changeover, but I repeat the point that I have just made: halogen look-alike lamps may be used as an alternative.

Prisoners: Disabilities
	 — 
	Question

Baroness Masham of Ilton: To ask Her Majesty's Government whether they will include in the training of governor grades and of prison officers the needs of prisoners with disabilities and long-term medical conditions.

Lord Bach: My Lords, prison officers receive specific training in diversity issues, including disability, as part of their initial eight-week prison officer entry-level training course. Self-taught basic health awareness modules have been developed on a range of disabilities and physical health issues and will be available for all staff via the intranet. Diversity is an integral part of training for governor grades, and the practicalities of meeting the needs of prisoners is covered in other learning programmes

Baroness Masham of Ilton: My Lords, I thank the Minister for that reply. He will be aware that prison officers only get about six to eight weeks' training, whereas in Norway they get two years. Is he aware that when I was a monitor at a young offender institute a young man of 17 died of asthma, having told the prison officers that he might die, and they did not believe him? Only this morning I heard that a prisoner in Wormwood Scrubs has died recently of asthma. Will he look into that case? There are so many different disabilities, such as diabetes and epilepsy, in prisons.

Lord Bach: My Lords, I pay tribute to the noble Baroness, who, by her questioning and interest in this subject, has assisted the Government to move forward in making this more of a priority than perhaps it has been in the past. I am grateful to her for telling me about the recent death in Wormwood Scrubs. I shall of course write to her with information about that.
	I am happy to be able to tell her that, since 2006, when the PCTs took responsibility for healthcare in prisons, prisoners with medical conditions such as the ones she is very concerned about—asthma, diabetes and epilepsy—have been under the care of the healthcare department within their prison and have a care plan. Part of the role of healthcare professionals—in other words, nurses—is to train, support and educate those responsible for the care needs of individual prisoners. I am happy to tell her that guidance will be published very shortly informing staff in each prison wing what should be done for prisoners with those long-term illnesses.

Lord Walton of Detchant: My Lords, while I appreciate the reasons for disbanding many years ago the National Prison Medical Service, which was led with distinction for some years by the late Dr Ian Pickering, it is crucial that prison officers and governors are trained on the issues raised by my noble friend. Can we have an assurance that doctors now contracted to provide medical services to prisons are involved in the training programmes relating to the management of individuals with these types of long-term medical condition and disability?

Lord Bach: Yes, my Lords, I think I can give the noble Lord that assurance. I will check with the department and write to him about the position in regard to doctors and nurses who work in prisons and their relationship with the prison staff who have to look after prisoners every day.

Lord Dholakia: My Lords, will the Minister consider bringing in external voluntary agencies, dealing particularly with disabilities, to provide input to training programmes for governors and prison officers? Similar examples exist in relation to race relations training and so on, where such agencies have considerable input to training.

Lord Bach: My Lords, the noble Lord will know that there is a revised and strengthened Prison Service Order 2855 dealing with prisoners with disabilities. It provides that all prisoners with disabilities must, of course, be treated with decency and without discrimination and be offered equality of opportunity in all aspects of prison life. Other principles are set out that have to be followed; for example, there must be a nominated disability liaison officer in each prison. I shall take away his idea that outsiders should come in, but I am sure that there is outside influence now.

Baroness Stern: My Lords, has the Minister seen the report of the independent monitoring board of Birmingham prison? I declare an interest as president of the Association of Members of Independent Monitoring Boards. The report notes failures to collect mandatory statistics on disability so that the numbers are not known, low levels of staff commitment, wheelchair users being located on the upper floor when the lift is not working and no one being trained in British sign language. Can the Minister tell the House when the situation in Birmingham, which is reported in similar prisons, is likely to improve?

Lord Bach: My Lords, I cannot tell the noble Baroness when the situation in Birmingham prison is likely to improve. That shows the huge value of the monitoring groups in all Her Majesty's prisons. Overall, healthcare in prisons is improving. Huge extra resources have been put into that aspect. It is a priority for the Prison Service along with the new Prison Service order and the commitment to a single equality scheme that is to be published in April this year.

Lord Low of Dalston: My Lords, on that point, the Minister will recall that in a recent debate on the treatment of women in prison I asked him whether the Government would apply the single equality duty, when it comes in, to prisons. He replied that, if and when it is enacted, it will apply to the National Offender Management Service. Can he confirm that it will also apply to individual prisons in the way that the existing duties in education apply not just to umbrella bodies but to individual schools?

Lord Bach: My Lords, I am afraid that I cannot inform the noble Lord that that will happen. The single equality scheme will be published in April 2009 and a single impact assessment is being developed to cover all the seven diversity strands. However, there is no single equality scheme for each police station, for example. This matter was debated at length in this House a couple of years ago. I believe that there is general support for a single equality scheme along with a much strengthened Prison Service order.

Pensions
	 — 
	Question

Baroness Gardner of Parkes: To ask Her Majesty's Government what assessment they have made of the recent report of the National Association of Pension Funds saying that a quarter of the firms surveyed may close their final salary pension schemes to existing members.

Lord McKenzie of Luton: My Lords, the Government have taken a number of steps to support good quality pension provision and are committed to helping scheme sponsors through this difficult time. We will continue to work with groups representing pension schemes, employers and scheme members to consider what further steps can be taken to support schemes.

Baroness Gardner of Parkes: My Lords, I thank the Minister for the reply. I do not have any particular interest to declare but I do have small shareholdings in a number of FTSE 100 companies. Is the Minister aware that there has been publicity about the danger to pension schemes invested in these companies, not only from the authority quoted in the Question but also from Pension Capital Strategies, which says that if there is a collapse in corporate bond levels, the liabilities of firms such as British Airways, which was in the worst position, would increase to nearly two and a half times the company's market value? What would be the position then for people in those pension schemes and for the shareholders?

Lord McKenzie of Luton: My Lords, it is important that we focus on the fact that pension schemes are about long-term investment and that short-term fluctuations in markets have to be worked through in this context. In terms of the debt instruments that are out there and available to trustees—I think that that was the thrust of the noble Baroness's point—we are aware that the Government are being pressed in relation to long-dated gilts, for example, to help support pension schemes. The UK Debt Management Office is consulting on supplementary methods of distributing gilts in the face of strong demand for long-dated, conventional and index-linked gilts. That consultation will inform the formulation of plans for gilt issuance during next year. It is important that we focus on the long term. In relation to schemes where employers do not survive and the schemes are underfunded, we have put in place the Pension Protection Fund, which makes sure that pensions are protected to a certain level.

Lord Oakeshott of Seagrove Bay: My Lords, I declare an interest as a pension fund investment manager for the past 32 years. I point out to the noble Lord that the great shrinkage in the number of pension funds that were open and contributing to the Pension Protection Fund since it was set up in 2004 means that it will no longer be sustainable; there will be too few funds paying in and too many people needing to be rescued. Will the Minister revisit the exchanges in Committee between me and the noble Baroness, Lady Hollis, in 2004, and the assumptions that she said were being made about the rate at which pension funds and companies could go bust? After he looks at it, I hope the Government will conduct a review. Perhaps they will see that the disaster scenario has arrived.

Lord McKenzie of Luton: My Lords, the Pension Protection Fund is designed to work both in a benign environment and in a downturn. The DWP, the PPF and the Pensions Regulator keep a watchful eye on these issues, and the PPF has tested its model against a range of scenarios, including very severe ones. The important point to remember about the PPF is that it is like a pension scheme: it pays out as and when sums fall due. Currently it is paying out about £3.7 million a month in compensation but has assets of £3 billion. So, even if the pay-outs were to increase significantly, the liquidity is there to support that for a considerable period of time.

Lord Taylor of Holbeach: My Lords, I declare an interest as chairman of the Conservative Party agents' superannuation fund. I want to bring this back to final salary schemes. During the passage of the last Pensions Act these Benches proposed a number of amendments to bring in risk-sharing arrangements which were designed by the industry to give a future to such final salary schemes. Why were they rejected? Has not the inevitable happened?

Lord McKenzie of Luton: My Lords, the amendments proposed by Members opposite were principally focused on conditional indexation schemes. Certainly, the consultation we undertook with stakeholders indicated that there was no great appetite for that—it would create a greater regulation, not less, and its impact on schemes would be quite limited. One of the strands of work we are undertaking at the moment is to look, together with the Pensions Regulator, at how we can better spread the word about flexibility on risk-sharing available within the existing framework. Along the way we also considered changes to mandatory indexation. However, there is no consensus around that; in particular, there is no consensus on whether it would really reinvigorate defined benefit schemes. I should make the point that when we are talking about risk-sharing, we are not talking about reducing risks but about changing the balance of risks between scheme sponsors and members. Therefore, it is important that we drive a consensus when changes are made.

Lord Forsyth of Drumlean: My Lords, is not the truth of the matter that, as a result of the tax-and-spend policies of this Government, private and public sector final salary pension schemes are no longer affordable?

Lord McKenzie of Luton: No, my Lords, I would not accept that proposition. Given the issues around longevity—which is probably the principal driver of this—and longer-term views of market returns from equities in particular, the challenges to defined benefit schemes are clearly increasing. That is happening not only in the UK but across the world. That is why we need to continue to engage and why we have engaged. We have reduced the revaluation cap to 2.5 per cent and the indexation cap to 2.5 per cent and frozen administration charges into the PPF and for the Pensions Regulator. We are helping where we can. We are looking at issues around Section 75, employer debt and statutory overrides whereby current scheme rules make it difficult to take advantage of these deregulatory matters. We are looking at Section 67, which is about future accrual. A big work programme is under way, and we are doing all that we can. However, the Government cannot stop the march of longevity. Well, they could, but I do not think that that would be a palatable policy initiative.

House of Lords: Conduct of Members
	 — 
	Announcement

Baroness Royall of Blaisdon: My Lords, on Monday I answered a Private Notice Question on matters arising from the allegations made by the Sunday Times this week about certain Members of this House. I want today to update the House on these issues.
	The Sub-Committee on Lords' Interests, chaired by the noble Baroness, Lady Prashar, has now met and its investigations into the allegations are under way. The sub-committee is dealing with these issues as a matter of urgency. In parallel, the Committee for Privileges is considering issues relating to the rules of the House. It may be helpful to update the House on developments on a complaint which has been made to the police in relation to the allegations.
	On Monday, the Metropolitan Police service received a request to consider investigating whether an offence had been committed by certain Members of the House. The police have considered this request, and they have now decided to review the relevant material in this matter to assist them in deciding whether it would be appropriate to carry out an investigation.
	I have met the Metropolitan Police on this matter and they have informed me of their decision. I should stress that the police are not investigating this matter at this stage. The police are reviewing the material in relation to the allegations to decide whether such an investigation would be appropriate.
	While the police are carrying out this review, it remains appropriate for the Sub-Committee on Lords' Interests to continue with its inquiry. The chairman of the sub-committee is aware of the police decision.
	I am sure that the House will appreciate that at this point there is nothing further that I can add to this statement. I shall, of course, continue to keep the House informed of developments in relation to these allegations.

Arrangement of Business
	 — 
	Announcement

Lord Bassam of Brighton: My Lords, with the leave of the House, my noble friend Lord Carter of Barnes will repeat the Statement on Digital Britain: The Interim Report immediately after the debate in the name of the noble Lord, Lord Browne of Madingley.

Welsh Ministers (Transfer of Functions) (No. 2) Order 2009

Copy of the Order

Motion to Refer to Grand Committee

Moved By Baroness Royall of Blaisdon
	That the draft order be referred to a Grand Committee.
	Motion agreed.

Business of the House
	 — 
	Timing of Debates

Moved By Baroness Royall of Blaisdon
	That the debates on the Motions in the names of Lord Browne of Madingley and Baroness O'Neill of Bengarve set down for today shall each be limited to two and a half hours.
	Motion agreed.

Climate Change
	 — 
	Debate

Moved By Lord Browne of Madingley
	To call attention to the political aspects of addressing climate change; and to move for Papers.

Lord Browne of Madingley: My Lords, I declare my interests. I am managing partner and managing director of Riverstone Holdings. This manages several energy-focused private investment funds, which hold stakes in two UK companies. I am also chairman of the Accenture Global Energy Board, a member of the advisory board of Sustainable Forestry Management Limited and a member of the climate change advisory board of Deutsche Bank.
	The time for talking about climate change is over; it is time to get things done. I should like to make four points. First, climate change cannot, and should not, be tackled in isolation. It must be placed at the heart of society, integrated with other priorities. Secondly, we have in front of us an opportunity to create a 21st-century green industry in the UK. We should seize the moment. Thirdly, the UK's energy policy needs to be retooled to deliver new, more diversified infrastructure; and, fourthly, we must strengthen international institutions so as to ensure that developing countries are tied into global climate change efforts.
	The IPCC's fourth assessment report provides us with a clear call to action: we must halve global emissions compared with current levels by 2050. The Committee on Climate Change recommends that the UK's contribution to this goal should be an 80 per cent reduction in the same period, a target now enshrined in the Government's pioneering Climate Change Act. I believe that both goals are appropriate and achievable.
	A great deal of economic analysis and policy thinking has been done, and there is a remarkable consensus on what it takes to get there: taking energy out of global GDP by revolutionising energy efficiency; taking carbon out of energy by transforming the energy mix in favour of renewable and nuclear energy and by deploying carbon capture and storage; preserving carbon sinks through improved forest and land management; and helping vulnerable people to adapt to climate change. We also know, in theory, the policies necessary to achieve those ends in the long run, the most important being pricing carbon, incentivising technology R&D and deployment, and removing barriers, such as the widespread subsidisation of fossil fuels.
	When it comes to implementation, however, our track record is decidedly patchy. The Kyoto Protocol has created a global market for carbon. Many parts of the world have adopted climate change targets, the most ambitious being the EU's 20/20/20 package. National mandates and incentives have stimulated significant investment in alternative energy. Pioneering work has been done by scientists and engineers, many of them based in the UK. New low-carbon technologies have been created, and the costs of proven technologies have fallen. The business community has also stepped up, signalling its willingness to take action in a flurry of initiatives.
	Yet, despite all this activity, global emissions have grown faster than even the worst-case scenario projected by the IPCC in 2000. Here in the UK, we will almost certainly miss our original ambition of reducing emissions by 20 per cent by 2010 compared with 1990 levels, and we have made slow progress in scaling up renewables. Halving global emissions by 2050 will require what has been described as "an industrial revolution in a third of the time". It is clear from every analysis that I have read that the greatest obstacles to getting there are not scientific or technological, nor are they related to macroeconomic cost; the greatest challenges are political.
	My first point is that climate change cannot, and should not, be compartmentalised or pushed into the long grass. It is essential that climate change efforts are integrated with other social priorities—that environmental integrity is made a tangible part of economic prosperity and national security, at the centre of society. That means that all levels of government and all government departments need to be involved in the solution. It means making a much more determined appeal to hearts as well as minds. Environmental integrity is not an option or a luxury; it is fundamental for society to flourish. There are trade-offs between climate change and other priorities, which are felt particularly keenly by some interest groups. An example is the auctioning of carbon permits which are essential in imposing a meaningful carbon price under the EU ETS. Auctioning will impose additional costs on fossil-fuel-intensive industries and their customers. Yet I am convinced that these costs will be manageable.
	This is not the first time in my career that a proposed policy change has prompted fears about competitiveness. As long as all players in the industrial sector are eventually treated equally, such concerns nearly always turn out to be exaggerated. There are also other trade-offs, such as whether to build new coal-fired power plants which would enhance energy security but harm the environment. There are also many areas of activity where economic prosperity, national security and environmental integrity come together. Building green energy infrastructure and improving energy efficiency are two examples. This is now being recognised in the United States where President Obama has promised to double clean energy capacity as part of his plan to stimulate the economy. A similar approach is called for by other Governments.
	This is my second point. Here in the UK a green revolution in our offshore waters is a prize waiting to be seized. As the Government have affirmed, this is an area of activity where this country could differentiate itself by building on our world-class wind, wave and tidal resources and our expertise in marine engineering. New wind turbine plants, transmission lines, installation vessels and substations would create thousands of jobs that might otherwise find their way elsewhere. Enhanced clean-energy infrastructure, coupled with widespread deployment of smart meters and smart grids, would bolster energy efficiency. Current policies are not creating enough bite. To those who say that it is not the job of government to kick-start the industries, I say that it has been done before with great success.
	The UK's offshore oil and gas industry was created from virtually nothing during the 1970s and 1980s. I remember how, in the early days, companies such as BP had to rely on hourly workers from America because the UK did not have enough qualified technicians. Now around 300,000 people resident in this country are employed in the oil and gas industry. High oil prices provided a strong market pull, but Governments gave industry a helping hand, creating generous tax incentives and a supportive, regulatory environment in helping to build strategic infrastructure. There is even more cause for government intervention today because energy security and climate change mitigation are public goods. They would not otherwise be recognised by the free market. The alternative would be to leave new technologies to the vagaries of fossil-fuel derived power prices before they can stand on their own two feet.
	That leads to my third point. We must fundamentally rethink the objective of energy policy in this country. As the Oxford economist, Dieter Helm argued in a recent report, competition—the guiding star of UK energy policy since the 1980s—worked well while there was a surplus of energy infrastructure capacity. But price competition will not deliver the new, more diversified infrastructure that we urgently need to bolster energy security and reduce carbon-dioxide emissions. I remain convinced that the market is the most effective delivery unit available to society, but it will need a new strategic direction and a new framework of rules laid down by government. That starts with gaining a better understanding of how investment decisions in energy are made. The up-front capital outlay of a typical project is paid back over 20 or 30 years. That means that policies must possess above all else long-term certainty and stability. Policies must be clear, transparent and accessible to all players, not just specialists.
	A good example is offshore wind. By insisting on a decentralised competition-based model, the proposed regime for offshore transmission licences risks falling short of the certainty, stability and clarity needed. A simpler, more strategic approach, such as the one adopted by Germany, should be considered as an alternative, at least for round 3 projects, with deliverability at the forefront of policymakers' minds. Government must also recognise that the combination of high capital costs, falling power prices and scarcer, more expensive debt finance is leading to inadequate returns. There is a real risk that offshore wind farms will be cancelled. One way to help mitigate that risk would be for state-controlled banks to provide loan guarantees for green infrastructure projects, an approach similar to the loan scheme for small businesses recently announced by the Government.
	All this willcome at a cost, although the net impact on consumers is likely to be significantly less than the impact of the rise in fossil fuel prices that occurred between 2004 and 2007, and the costs could be mitigated by improving energy efficiency. Harnessing the very large potential to improve energy efficiency in the residential and transportation sectors is proving difficult, even though many of these savings would be at low or negative cost. New financing mechanisms, developed in partnership with energy companies, will be needed to unlock these savings, in tandem with targeted regulations and public education programmes to change consumer behaviour.
	My fourth and final point is that the single greatest challenge we face is how to engage developing countries in a global climate-change agreement. It is estimated that the sum of national policies in the developed world is unlikely to achieve more than a third of the required emissions reductions by 2020. Developing countries represent the single biggest source of emissions growth, and they contain by far the most material opportunities to reduce emissions: two-thirds of the global potential, deliverable with half the capital expenditure. Yet on every measure of equity, it is unfair to expect developing countries to shoulder the same amount of effort as developed countries from the start. I believe the solution is twofold. First, developing countries must do what they can, focusing on areas, such as energy efficiency, that also enhance their economic prosperity and national security. Secondly, and in parallel, policymakers must harness the power of the market, putting in place strengthened international carbon-finance mechanisms. This was the central conclusion of yesterday's announcement by the European Union on EU climate change priorities. The CDM, with its project focus, has proved inadequate and difficult to scale up. It should be expanded, made less bureaucratic and significantly enhanced with carbon-finance mechanisms that apply across entire industrial sectors.
	One of the key recommendations of the Government's Eliasch review is the need for a new financial framework for preventing deforestation and encouraging good land management. These activities alone could contribute half the necessary reduction in global emissions by 2020. Additional funds will also be needed to encourage the transfer of low-carbon technologies internationally, to build administrative and human capital and to pay for adaptation efforts.
	Last year, rich nations spent more than $100 billion on overseas development assistance. A recent analysis suggests that flows of carbon-related finance to the developing world will, in time, need to be of a similar magnitude. This is a hugely ambitious and will be impossible without dramatically strengthened international governance. The answer is not to tear up existing institutions, such as the UNFCCC, and start from scratch. The evolution of GATT into the WTO suggests that, with the right support, institutions can widen and strengthen significantly over time. However, I believe that a new body, an international carbon fund, will be needed to act as a global central bank for carbon and to manage the exchange of multiple environmental "currencies" as national, regional and international schemes become linked together.
	All that will require a great deal of diplomacy, and the UK will have a critical part to play. This country possesses a good deal of influence on energy and climate matters in the EU, which has spoken with a single and determined voice in recent negotiations. Our relationship with the United States could be pivotal as Barack Obama's inauguration heralds a new era of US management. We hold close friendships with many of the most important developing countries. Several of those countries are in the G20, whose members are collectively responsible for 85 per cent of global emissions. With strong political leadership, the G20 could unlock a new global climate change agreement in Copenhagen this year.
	So we have a vision for the future, and the work on policy design is complete. Now we must begin the hard work of implementation. My advice to policymakers is simple: place climate change efforts at the heart of society; embrace the opportunity to build a new low-carbon industry; retool energy policy to deliver the new diversified infrastructure we need; and focus as much, if not more effort externally on forging a global agreement underwritten by stronger institutions. With that, I beg to move for Papers.

Lord Giddens: My Lords, I congratulate the noble Lord, Lord Browne of Madingley, on securing this debate and on the elegant and powerful manner in which he introduced it.
	I want to take seriously the title of the debate—the political aspects of addressing climate change—and argue that climate change is a political problem like no other that we have had to face before. There are many reasons for that, but I shall mention just two primarily. One is what, with the indulgence of noble Lords, I call Giddens's paradox. Giddens's paradox states that, as climate change is an abstract and to some extent future risk, it is very difficult for ordinary citizens to relate to it in such a way that they are prepared substantially to change their everyday behaviour. However, if we wait until climate change becomes a risk that is visible in that way—if, for example, we wait until there is massive flooding of the dykes in the Netherlands—it is by definition too late because at the moment we do not know how to get the emissions out of the air once they are there. I suggest that that paradox infects most aspects of national and international policy-making on climate change.
	The second key difficulty is what political scientists call free riding. Free riding is everywhere in the area of climate change policy. When I came into the House of Lords this morning I walked through the car park. There was one big SUV parked there, a big Mercedes parked there and a little Prius parked closer to the entrance. You could say that the driver of the Mercedes and the driver of the SUV are free riding off the driver of the Prius, who is at least making some attempt to reduce his or her emissions, but you could also say that the driver of the Prius is free riding off people like me who came on the Underground or who—like most noble Lords here, I am sure—walked to work. Free-riding issues are everywhere in the area of climate change.
	I am a strong supporter of the need, as the noble Lord said, to produce international agreements to limit emissions and, like everyone, I hope that our negotiations stretching from Bali through to Copenhagen are successful, although I have my doubts about that. However, when one is talking about the politics of climate change, it is crucial to remember that negotiations on their own do not amount to very much, even if they should reach solid agreement. Those negotiations will count at the level of the state only if states actually have the policies to implement them. Furthermore, what the industrial countries do will be crucial, as we all know, because the large developing countries, China and the others, will not take significant action unless they are convinced that the industrial societies already have in place practical and consequential policies for limiting climate change.
	The noble Lord, Lord Browne, touched only briefly on the policies of the industrial countries. I have three or four points to make about them. First, almost all the industrial countries that have been the most successful in limiting their emissions have been successful by accident, not through climate-change inspired policy. Those countries include Sweden, Denmark and Japan, which is at the head of innovative technology in some areas—technology that led, for example, to the Prius. Perhaps I should not mention the Prius in the House of Lords. These things were driven primarily by the oil crisis of the 1970s. These countries started to react at that time to reduce their dependency on oil and imported gas. One of the salutary features of this is that it seems to have taken some 20 years for such technological innovation to feed through. This is a little disturbing when you consider the climate change policy that is instigated now, even in a country such as Germany, which is in the vanguard of climate change policy among the industrial countries mainly because of changes in that earlier period rather than recently initiated policies. This is cause at least for some salutary observation.
	Secondly, there are still yawning divergences between the industrial countries' levels of emissions. Most noble Lords here will be well aware that the United States produces about twice as many emissions per head as the EU countries do, but even within the EU there are very large examples of free riding. Sweden, for instance, is one of the few countries in the world that has produced an absolute reduction in its greenhouse gas emissions. In comparison, emissions produced by Spain over the period since 1990 have gone up 19 per cent. So no matter what the European Union does with its policies—they are certainly well intentioned—it will be very hard to close that gap.
	Thirdly, every country is struggling to produce consistent policy on climate change. This is very visible in my own Government—the Climate Change Act and the Energy Act are very important contributions—but I am not in favour of investing in further coal-fired power stations in the hope that CCS technology will prove effective, and I am not in favour of the expansion of Heathrow. However, not only this country is struggling with this issue. Germany is committed to the phasing out of nuclear power stations, but no rational observer can see that it can meet its climate change targets if it phases out nuclear power. Nuclear power is still a substantial proportion of the energy mix in Germany. The noble Lord, Lord Browne, rightly emphasised that you must have consistent policy within a range of other policies. It is not good having well motivated policies in one area and negating them by what you do in other areas. This problem is fairly formidable.
	Fourthly, surveys of people's attitudes to climate change show that Giddens's paradox is alive and well. A lot of survey material in most industrial countries in the past 10 years shows that people express greater concern about climate change than they did before, but most of them are not prepared to change their behaviour and are not changing their behaviour. A recent and very good survey study by Defra in this country showed that about 17 per cent of the population are prepared to do something and are doing something in response to climate change, whether it is recycling, walking more or whatever. The vast majority, however, are not. For most people, climate change remains an issue at the back of the mind rather than the front. It will be difficult to propel it to the front.
	There are three implications, which converge a lot with what the noble Lord, Lord Browne, said, and I shall ask the Minister one or two questions about them. First, we need a new approach now. Fear is not a good motivator for change, especially fear of an abstract threat that most ordinary people find it hard to come to terms with. We should therefore switch, much as the noble Lord, Lord Browne, indicated, to an investment-generated policy. We should look for positives rather than negatives. We should recognise that this involves a transformation of the economy and society as a whole.
	Personally, I should like to see a visible, advanced vanguard of business leaders committed to progressing environmental goals, who have much more prominence than such a group has at the moment, visible both nationally and internationally, and whose views reach the citizenry. I do not see why we cannot have, for example, national competitions for technology and innovation, where the winners achieve national recognition. I ask the Minster whether such policies are in prospect. Are the Government working on these issues?
	Secondly, climate change goes through the whole economy. We must therefore do a lot of work on the future of the economy but I do not see where it is being done. For instance, you see pronouncements such as "Wind power will generate 100,000 jobs in the British economy". That is probably not the case. Most technological innovations reduce the need for labour power. Anyway, if you generate more energy by alternative low-carbon sources, people will lose their jobs in the older industries. We need a thoroughgoing analysis of the economy. Have the Government a mechanism for providing that?
	Finally, we need a lot more exchange between the industrial countries. Of course, we need something analogous to but better than the CDM. We need a lot more networking between the industrial countries, and a lot more technological transfer between them. Do the Government have plans to promote this?

Lord Dixon-Smith: My Lords, the noble Lord, Lord Browne of Madingley, has brought unparalleled knowledge and experience of the energy industry to this question this morning. I, for one, am extremely grateful to him. He is absolutely right: this is, above all else, a political problem at this stage. For better or for worse, we do not know in detail what the solutions will be because everything is in a state of evolution. Not the least of our problems is that we must currently keep all options open.
	I am a simple farmer. I have no interest to declare other than that, the noble Lord, Lord Giddens, will be disappointed to learn, I drive a Mercedes. I do so because I cannot purchase the alternative that I want, which is only just becoming available on world markets. I want a hydrogen-powered car, which means needing not just the car but the fuel infrastructure for it. There, I defer to the noble Lord, Lord Browne, who will know far more about the possibilities of producing that than I could.
	We must tackle this issue in a positive way. Too often, matters are discussed in the context of what we must stop doing. If we are to bring the public with us so that they do not react against the whole proposition of this hugely complex international subject, we must discuss it in the context of how we keep everything going. That is vital if we are to carry everyone with us. The negative question just opens the door for people to ride particular hobby horses, as we have seen already, by which they want to stop some things. Society did not develop in the way that it has, or to the point that it has, without a great deal of benefit to and meeting the needs of people in how they wish to live. We have an enormously high standard of living today compared with previous periods. Matters are made worse, dare I say, because we also have a rapidly rising population—not in this country perhaps, although it is rising too fast here. That is not an issue for politics today, but it probably will become a highly contentious political issue and will need to be dealt with.
	Modern society demands high energy. It is very easy to say that we can economise on energy. Indeed, we shall and must do that. But I again draw the attention of the House to the 2005 report of the Science and Technology Committee on energy efficiency. It shows a very interesting graph with a steadily rising GDP; it shows the units of energy required per unit of GDP steadily falling. But, actual energy consumption remains relative and is climbing very slowly. We need to recognise that, while we must continue to work very hard on the efficient use of energy, this is not part of the solution. If we hold our energy consumption, and society's development continues and we continue to improve our standard of living, we will do very well to keep our energy consumption at its present level.
	The problem is not the energy that we use; it is the source of the energy that we use. Above all, that is what we have to change. I shall digress for a moment into carbon capture and storage, which all too often is held out as a panacea. Carbon capture and storage will deal only with large institutions producing large volumes of CO2. The vast bulk of our emissions come from the domestic, industrial and heating sectors, which is a very different problem to deal with. It is in that sector, above all else, where we have to make the main introduction of alternative technologies.
	In addition, we do not know what the cost of carbon capture and storage will be. It is all very well saying that this is the technical solution, but if it proves to be economically uncompetitive, we have a problem. We have to consider that problem and recognise at this stage that we must keep all the technological opportunities open. Some will be very expensive and will have to be written off because, ultimately, they will not be economically viable even if they are politically acceptable. If they are not economically viable here, nor will they be in other parts of the world.
	We do not know what the absolute costs of going nuclear will be. We do not know what the costs of dispersed generation, which will become very important across society, will be. We do not know what the cost of tidal barrages will be. They will require novel funding because, unlike most of our energy-generating installations which involve a 40- or possibly 50-year timescale, with tidal barrages the timescale is possibly 200 years. As I say, a novel approach to funding would be needed. We do not yet know the real costs of organic waste digestion, which can produce methane to turn to electricity.
	We do know that all the green sources of energy lead to electricity. We in society want to maintain our present mobility, on which we are very dependent. Modern society relies on a great deal of transport for the movement of people and goods, so we need fuel systems that can be carried on vehicles. It is easy to say that battery-powered vehicles are the answer; they may be, but they will not plough my fields and they will not deal with the amount of road transport we have. I am afraid that we are not going to get back to moving everything by rail. That is why I want my hydrogen-powered car. I have no problem with motor manufacturers; indeed, I want to see them continue in business, but I want to see them continuing by producing emissions-free vehicles.
	To do that, we must come back to the energy sector. It has to make a transition on an enormous scale, with investments that involve the whole of society. Governments rely on investments from the energy sector, and the investment world itself relies on investments in the energy sector because they regard it as a safe investment, but suddenly all that has to change. It is politics written in large capital letters, and it will be politicians who have to will the solution and create the conditions for this to happen.
	I am grateful to the noble Lord, Lord Turner of Ecchinswell, for his recent work with the Climate Change Committee because he has made the task a bit easier. The committee recommended that we must reduce our carbon emissions by 80 per cent by 2050. That makes the picture of what the economy must look like in 2050 somewhat clearer. In my view, by then the only carbon dioxide emissions that will be acceptable will be those for which there is no physical alternative. I can give three illustrations and, although perhaps the first is the most stupid one, it is none the less real: we can do nothing about cows; we may be able to reduce slightly the methane they emit through dietary changes, but in the end we can do very little about the fact that cows produce quite a large proportion of this country's global warming emissions.
	Aviation will continue to be a problem, although I want to see the industry continue. The problem with aeroplanes is energy density, so it is difficult to see an alternative to fossil fuels except, possibly, biofuels. I say "possibly" because I am sceptical about biofuels, and as a farmer I regret having to say that. However, the harsh reality we have to face is that there is not enough land to provide mankind's energy and his food.
	We have a dreadful responsibility here. We unleashed the Industrial Revolution on the world and in my view we now have the responsibility to show that a solution is possible. I would love to know that, when my grandchildren reach our age, the solution will be within their grasp. At the moment, a combination of political and economic inertia make that prospect look rather poor. But matters are improving slowly.

Lord Broers: My Lords, I, too, congratulate the noble Lord, Lord Browne, on introducing this debate. It is topical and urgent and there is no one better qualified than the noble Lord to introduce it.
	I wish to make a general point about the way in which the Government tackle complex engineering and technological issues because it relates to the likelihood of our success in dealing with climate change. It is apparent that over the past four decades we have lost competitiveness in many areas of technology in which we used to be strong and had profitable companies based on home-grown technological advances. It has puzzled and distressed me why our national strategies have produced this unfortunate result. In retrospect, the strategies have frequently been inadequate both in the goals that were set and in the time allowed to reach them.
	We have, however, sustained some outstanding industrial capabilities—the accomplishments of Arup and Rolls Royce are shining examples—but these companies have survived, at least over the past two decades, largely on their own and almost in spite of government direction. But I am not suggesting that all engineering issues, such as the supply of clean, low-carbon power, can be tackled solely by private enterprises. Government must be involved because initially the commercial incentives will not be sufficient.
	The protection of the atmosphere is a very long-term task without immediate commercial benefit. It took state and federal regulation in the USA to introduce pollution controls on road vehicles. There was insufficient commercial motivation for Detroit to act without regulation. Fortunately, the government-enforced regulations proved effective and practicable, and were relatively rapidly taken up worldwide. There is the opportunity for the UK to show similar leadership in aspects of climate change.
	The science of climate change is reasonably well established in many areas, and it is now up to engineers to develop practicable solutions. By "practicable" I mean technologies that not only reduce pollution and carbon dioxide but which are economically sensible, sustainable from a maintenance point of view and can be implemented on a timescale that meets our goals. So far some of the proposals that have emerged from the Government have failed to be practicable. I cite the overambitious expectations for offshore wind, which the noble Lord, Lord Browne, mentioned, and which have now been generally accepted as unrealistic.
	From whence do these recommendations come? I am naïve in these matters but it seems certain that they are not the collected recommendations of competent engineers. Too often the Government seem to turn to individuals with little professional engineering experience to chair inquiries that, as a result, almost inevitably come up with recommendations that stand little chance of passing my practicality test or, on the other hand, are too commercial and short term and try to avoid the high initial cost of really tackling the problem. An example of the latter was the transport strategy that emerged at the end of 2006.
	Within government departments, many who draft recommendations have no science, let alone engineering, qualifications. In addition, most departments have science advisors when they would be better off with engineering advisers. The House of Commons Innovation, Universities, Science and Skills Select Committee, in gathering evidence for its inquiry into engineering in government, asked me whether I thought it would be sensible to have chief engineering advisers alongside the chief science advisers in some government departments. My response was that it had it the wrong way round and that the question it should be asking was whether it was necessary to have science advisers to work alongside engineers. The chair then asked me what my answer to that question was. I replied that the answer was probably no, because to be classed as competent, engineers should have a thorough knowledge of the science of their specialism.
	Engineers are, in effect, scientists who have gained the additional knowledge necessary to make science useful. It is engineers who are needed to fix our economy and come up with the practicable solutions to the supply of, for example, carbon-free energy. Science forms the base for engineering and it is essential to maintain a strong science base. As my noble friend Lord May and others have pointed out many times, we have a very strong science base, but it is not scientists who will fix the economy, it is engineers. As has become painfully obvious over the past few months, it is not financiers either.
	I was pleased to hear the noble Lord, Lord Mandelson, make that point in this Chamber two days ago when talking about the automotive industry. He said that, for the future, Britain needs an economy with less financial engineering and more real engineering. Creative engineers are needed if we are to give our automotive manufacturing facilities unique capabilities that will encourage their overseas owners to sustain and grow them, rather than phase them out when the going gets rough.
	I recommend that in future the Government turn more to engineers, whether to individuals, the Royal Academy of Engineering or the institutions, to gain advice and develop strategies. I of course declare my interest as an engineer and a former president of the Royal Academy of Engineering. We have a large cohort of talented senior engineers in this country, real engineers who have participated in the technical design of successful high-technology products and not just managed others doing the same. However, it may be wise to turn to the international community to gain advice.
	Last year I participated in a committee drawn together by the US National Academy of Engineering that was charged by the US academies to come up with the grand challenges for engineering in the 21st century. There were 18 of us, including a majority of well known Americans such as Larry Page, one of the founders of Google, and Craig Venter, whose innovations speeded up the decoding of DNA. There were also three of us from overseas. If any nation could claim an adequacy of engineering talent, it is the USA, but it none the less used overseas advice to complement its own. We should do the same.
	We have too many people standing around waffling and talking about blue-sky ideas. Will the Minister please ensure that we select professional engineers such as those in Arup and Rolls-Royce who have demonstrated that they know how to practise successfully in the real world of modern technology to help us determine how we will meet the challenges presented by climate change?

Lord Smith of Finsbury: My Lords, I, too, congratulate the noble Lord, Lord Browne, on putting this hugely important issue in front of us. As chairman of the Environment Agency, I have a passionate commitment to protecting and enhancing the environment on which we all depend. We all have to understand and recognise that the prospect of climate change is by far the greatest challenge that any of us faces environmentally over the coming years. I listened with great interest to the speech by the noble Lord, Lord Broers; I see that CP Snow's "two cultures" are now being redefined as the cultures of engineering and science. I am delighted to say that the Environment Agency has some outstanding engineers and some outstanding scientists among those who work for us.
	There is now broad agreement across the scientific world and most of the political world about the importance of facing up to the challenges that climate change imposes on us. It is of course happening faster than we think. Arctic sea ice is declining much more rapidly than was projected by the Intergovernmental Panel on Climate Change in its fourth assessment report. Many scientists now believe that the complete disappearance of Arctic ice in the summer months could happen by 2030, which brings the prospect of dramatic changes to the oceans' circulation and even more rapid absorption of solar heat on to the earth's surface. The US Geological Survey has recently published research that estimates that global sea levels could rise by up to 1.5 metres by 2100, which is 50 per cent more than we are currently allowing for in coastal defence projects and three times as much as the IPCC projected.
	Many of the consequences will be with us sooner than we think. One of the most startling facts about climate change is that, even if the globe stopped producing any carbon dioxide tomorrow, climate change would carry on for another 30 years because of the time lag in the building-up of gases in our atmosphere. We are already beginning to see some of the consequences, even in the UK, such as increasingly erratic weather patterns. Given my role in the Environment Agency, I am starkly conscious of the increasing frequency and severity of flooding in many parts of the country. We are seeing storm surges coming down the North Sea, exacerbating and hastening the erosion on parts of our eastern and southern coasts that has been happening for many centuries. During the past decade we have seen six of the hottest years ever recorded. These things are happening here and now.
	Most political attention is focused on the economic crisis that we are all living through, but we must not in the course of it lose sight of the climate crisis. If there is one message that I hope will come from our discussions today, it is that we should not use our current economic difficulties as an excuse for burying the climate issues that we need urgently to address as well. We will, God willing, come out of the economic crisis in due course. When we do, the climate crisis will still be there and the clock will be ticking even faster than it is now.
	The economic and political circumstances that we are living through are an opportunity as well as a challenge. They give us a chance to think seriously about the sustainability of what we do and the consequences for climate change of how we run our businesses, our lives and our economies. The Government, I am pleased to say, have shown some welcome determination in this area. The publication of the Stern report changed the terms of debate about the importance of the environment in relation to the economy. The passing of the Climate Change Act is a world first in placing legal responsibilities on present and future Governments to work to mitigate climate change. The commitment to reducing carbon emissions by 80 per cent by 2050 is enormously welcome, as is the creation of the new Department of Energy and Climate Change, explicitly linking those two parts of government policy together in the same department. Some of the energy efficiency programmes that have been put in place are welcome, too—it is just a pity that the Government made the wrong decision about Heathrow.
	However, we need to do more and I put four proposals in front of your Lordships today. First, let us take a lesson from Barack Obama and see green technology and green jobs as being central to the answers to the economic difficulties that we are going through. I have been hugely impressed, during President Obama's campaign, his inaugural address and subsequently, by the way in which he has seen a coherent, concerted and determined effort to develop green technology and green jobs as a central part of his economic package. We should do the same here. We have had some welcome bits and pieces of initiatives from the Government, but we have not as yet had the determined, coherent and cohesive national programme of green economic development that we should aim for.
	Secondly, we need to aim for the complete decarbonisation of power generation by 2050, which means looking seriously at the development of a whole range of renewable technologies. We have done some things on wind power and hydropower, but there is a lot more that we could do. One area in which we need to put a lot more research effort is tidal power and the ways in which it could be harnessed without causing unacceptable damage to the ecology and environments of coasts and estuaries. I am very pleased to hear in the Government's most recent announcement that they have put £500,000 into research on tidal fences and reefs. We need to do much more.
	Thirdly, we need to make a serious effort to develop carbon capture and storage. If we are to have coal-fired power generation into the future, it would be environmentally unacceptable for it to be without integral carbon capture and storage. It is not enough to say that Kingsnorth can go ahead provided that it is carbon capture ready. If it is to go ahead as a coal-fired power station, it must include carbon capture and storage as a major, large-scale demonstration project from the word go. One of the iron laws of the market economy is that, if one places requirements of that kind on the private sector, it will deliver, but one has to ensure that those requirements are in place. It will be difficult and expensive—the technology is as yet in its infancy—but we have a real opportunity not just to get Kingsnorth right but to take a global lead in developing a technology that the world is going to need.
	Fourthly, we need to prepare for the Copenhagen summit later this year, because international endeavour in getting a carbon budgets and trading system right for an international agreement on tackling climate change boldly and effectively is a priority.
	These are difficult things to do. Some will be expensive, but many will reap huge dividends in the future. They are difficult but not impossible. We have succeeded in environmental improvement before. Sulphur dioxide emissions are down by some 90 per cent on 20 years ago—we have virtually solved the problems of acid rain and we have improved water quality enormously. We now need to apply the same political, economic and environmental will to what is quite simply the most important challenge that our generation faces. Yes, we must do it, and, to coin a phrase, "Yes, we can".

Lord Hannay of Chiswick: My Lords, my noble friend Lord Browne of Madingley is to be congratulated on three counts on initiating today's debate. First, he is to be congratulated on its timeliness, coming as it does just after the Government's climate change legislation has completed its passage through both Houses and at the beginning of a crucial year for the international negotiations on post-Kyoto arrangements leading up to the UN Copenhagen conference in December. Secondly, he is to be congratulated on steering us away from the already well trampled ground of the scientific and economic cases for early action to slow down and reverse climate change. Thirdly, he is to be congratulated because, in his time as CEO of BP, he gave a notable lead in facing up to the challenge of climate change when many of his colleagues and competitors in the oil industry were still in a state of denial on the subject.
	The past few months have brought both good news and bad on the prospects for a successful outcome to the post-Kyoto negotiations. The best news is that the last two developed country hold-outs against the need for early action—the United States and Australia—have now, following their 2008 elections, joined the consensus for taking such action. The only slightly less good news is that the European Union, whose leadership is vital if these negotiations are to succeed, has managed to sort out its own internal arrangements, without which its earlier commitments would just have been so many empty words. However, it was a close-run thing and, as was observed after a different battle, we cannot afford many more victories of that sort.
	Still in the good but not very good news category is the fact that the main developing countries, which had earlier tended to treat this issue either as a developed country fad or as something that these countries would have to sort out on their own, now recognise the need to negotiate seriously about their own commitments. However, this recognition is offset by a notable tightening of their negotiating stance as the time for taking decisions approaches.
	In the clearly bad news category is the world's financial and economic turmoil, which is giving rise to siren voices arguing that we cannot now afford to take on serious new commitments over climate change and that we should postpone all that until we have sorted out the mess that we are in. However, the longer we postpone decisions on climate change, the greater the pain will be.
	The worst news of all, and not yet generally recognised as such, is that time is getting very short if we are to have any hope of achieving a successful outcome at Copenhagen. It would be foolish to believe that 192 countries can come together there and settle matters if the building blocks for a settlement have not been put in place ahead of time. That was the experience at the Earth Summit in Rio in 1992, when what was achieved—the climate change and biodiversity conventions—was settled in advance, and what was not settled in advance, on desertification and forests, was not satisfactorily sorted out there. We really are in a race against time.
	I intend to direct my remarks on the international political aspects of climate change to three main issues: burden sharing; research and technology transfer to developing countries; and institutions. Of these three, burden sharing is far the most complex and most likely to cause the shipwreck of the whole enterprise if it is not satisfactorily resolved. It can relate, of course, to a regional grouping such as the EU or to a sharing of the load with the other developed countries, such as between the EU, the United States and Japan. Most sensitive of all, it can relate to the balance between the developed and developing countries.
	It would be helpful to hear from the Minister about the Government's thinking on the second and third aspects of burden sharing. How do the Government foresee negotiations with the new United States Administration, who are still in the process of working out their policy on climate change? How do they see it moving ahead? Does the Minister agree that the burden sharing between the two largest carbon emitters—the United States and China—will be crucial to the outcome of the overall negotiations? How does the UK intend to square the circle of burden sharing between developed and developing countries more generally? Can he assure the House that the Government will not flirt with the dangerous concept of threatening the imposition of trade barriers on emitters that do not accept a share of the burden? Surely that would be a most risky and unwise approach at this time, when general protectionist pressures are on the rise.
	Possibly every bit as important in achieving a balanced outcome between developed and developing countries will be the question of technology transfer. For technology transfer to work, you need to have something to transfer, which will surely require a major increase in the energy-related research expenditure of this country and the EU, as well as of other developed countries. Do the Government agree that narrowing the gap between the much higher amount of energy needed to achieve a unit of production in the developing countries and that needed to do so in developed countries is at the heart of the effort to handle climate change?
	We hear a lot about the creation of green jobs, but we do not hear an awful lot about the specifics of it. How do the Government intend to put some flesh on the bare bones of their rhetoric? Are we really doing enough to boost research in the key areas? The whole question of carbon capture and storage is central, offering as it does a potential key to using the massive coal deposits in China, India and eastern Europe without driving a coach and horses through our carbon emission objectives. Are we devoting enough resources to that crucial area of research and bringing enough urgency to the matter? No one who heard the recent Question Time exchange in this House on that point can confidently answer that in the affirmative.
	Then there is the matter of institutions, which is probably not on most people's priority list at this stage, but which is essential if commitments entered into at Copenhagen are to be creditably maintained, equitably implemented and monitored properly. One thing is certain: the present UN institutional arrangements for handling environmental issues will be completely inadequate for that task. The UN Environment Programme, known as UNEP, has neither the mandate nor the resources and capacity to do that. There will need to be a fully fledged UN agency of the sort that we have to handle health or refugees to manage the post-Copenhagen follow-up. If a more robust and wider mandate with more resources is to be agreed, would it not make sense to bring issues relating to energy within the ambit of any new agency? At the moment, energy issues, which are more and more closely related to environmental ones, have no real home within the UN system. Will the Government give the House some idea of their thinking on these institutional matters?
	None of these issues will be easy to resolve and none will get any easier if the international community procrastinates or becomes deadlocked in the negotiations. Quite the reverse—the longer we postpone taking effective action, the costlier it will be. The Government have an important role to play both within the European Union and more widely and I hope that the Minister will be able to assure the House that they will continue to give a lead, as they have done hitherto, and bring to these negotiations all the energy and imagination that they can muster.

Lord Rees of Ludlow: My Lords, I start with a bit of history. The Thames Barrier was conceived in the 1960s and completed in the early 1980s. It was a pioneering example of a major investment, more than £1 billion in today's money, as an insurance policy against a very unlikely event—the flooding of London—which would have an economic impact many times larger. The debate that led to the barrier was a micro and localised version of the global issue confronting us today.
	The far-sighted committee that advocated the barrier was chaired by Sir Hermann Bondi. He seemed an odd choice for the task; he was an academic in my own field—a cosmologist. I do not dissent from anything that the noble Lord, Lord Broers, said about engineering, but I draw some comfort from this precedent when venturing into a topic far from my area of expertise.
	The politics of climate change are far more intractable than the science. It is clear that broad and sustained consent in many nations is a prerequisite for any effective action on climate change—as the noble Lord, Lord Giddens, has emphasised. Indeed, the noble Lord has spelt that out in a forthcoming book which he was too self-effacing to mention in his speech. However, there is zero chance of political consensus unless the public are confident that the scientific basis for the policies is firm.
	Some things in science are uncontroversial. There is no significant doubt that CO2 is a greenhouse gas—indeed, Sir John Tyndall first recognised that 150 years ago. It is also uncontroversial that the CO2 concentration has been rising for the past 50 years and that if you pursue business as usual it will reach twice the pre-industrial level by 2050 and more than three times that by the end of the century. The higher its concentration the greater the warming and, more important still, the greater the chance of triggering something grave and irreversible, such as rising sea levels due to the melting of the Greenland ice-cap, runaway release of methane in the tundra, and so forth.
	It is still substantially uncertain just how sensitive the climate is to the CO2 level and what regions of the world will be affected most. It is the "high-energy tail" of the uncertain probability distribution that should worry us most—the small probability of a really drastic climatic shift—just as for the Thames Barrier the main justification was "insurance" against the rarest and most extreme tidal surges.
	Global warming involves long time lags. It takes decades for the oceans to adjust to a new equilibrium and centuries for ice-sheets to melt completely; so the main downsides of global warming lie a century or more in the future. Therefore, as in the context of the Thames Barrier, we have to ask what discount rate we should apply. Should we commit substantial resources now to pre-empt much greater costs in future decades?
	There is a second feature of the climate change problem, and it is very different from the Thames Barrier. The effect is non-localised: the CO2 emissions from this country have no more effect here than they do in Australia, and vice-versa. Indeed, the worst effects are likely to be in Africa, Bangladesh and other places that have contributed least to the problem. That means that any credible regime where the polluter pays has to be broadly international.
	To ensure a better-than-evens chance of avoiding a potentially dangerous tipping point, it is widely agreed that global CO2 emissions must by 2050 be brought down to half the 1990 level. That is the target espoused by the G8 and the EU. It corresponds to two tonnes of CO2 per year from each person on the planet. For comparison, the current European level is about 10 and the Chinese level is already over four. To achieve the 2050 target without stifling economic growth is a huge challenge. For us in the UK, the 80 percent cut is enshrined in the Climate Change Act.
	In the years beyond 2050, the world may indeed have shifted to a low-carbon economy based on new technology and drastically changed lifestyles. But that is not soon enough. Unless the year-by-year rise in annual emissions can be turned around by 2020, the atmospheric concentration will irrevocably reach a threatening level.
	That is the real problem. Even optimists over the prospects in solar energy, advanced biofuels, fusion and other renewables have to acknowledge that it will be at least 30 years before those can fully take over. Coal, oil and gas seem set to dominate the world's ever-growing energy needs for at least that long. That is why an immediate priority has to be to develop carbon capture and storage—CCS. Carbon must be captured from power stations before it escapes into the atmosphere and then, somehow, it must be stored underground.
	To jump-start CCS technologies and implement a co-ordinated plan to build the 20-plus plants needed to test all the options might require $10 billion a year of public funding worldwide. That expenditure would be a small price to pay for bringing forward, by five years or more, the time when CCS could be widely adopted and the now rising graph of CO2 emissions turned round. Without CCS there is no prospect of avoiding a rise in CO2 above 500 parts per million, which is getting in the danger zone.
	Current R&D in the entire energy sector worldwide is far less than the scale and urgency demand. There is a glaring contrast here with health and medicine, where the worldwide R&D expenditures, both public and private, are disproportionately higher than those for energy. Surely this imbalance should be corrected. The Obama Administration have pledged an expanded effort, and in this country energy R&D has been cited as one way of stimulating the high-tech economy, although far more needs to be done. Indeed, I cannot think of anything that could do more to attract the brightest and best into engineering than a strongly proclaimed commitment by this country and by the US and Europe, to provide clean and sustainable energy for the developing and the developed world.
	What is the role of nuclear power in all this? I am in favour of the UK and the US having at least a replacement generation of power stations. However, proliferation concerns make us worry about this happening worldwide until we have some kind of fuel bank and leasing arrangement.
	Countries such as the UK can progress some of the way towards our targets by measures that actually save money. But globally, as my noble friend Lord Stern and others have emphasised, the costs will fall on the fast-developing nations; but they will have to be transferred to the developed West. My noble friend Lord Turner and others have estimated those costs as 1 or 2 percent of our GNP. That seems manageable and has been widely presented as such. However, I admit to some pessimism.
	To take another example, we are aware of the underfunding of overseas aid, which has not reached the 0.7 percent target despite the clear humanitarian imperative. That perhaps augurs badly for the actual implementation of the measures needed to meet the 2050 carbon emission targets, where the payoff is less immediately apparent than it is in overseas aid. Perhaps that is an over-pessimistic comparison, because there are extra shorter-term and less-altruistic motives for doing what is needed—energy security and diversity in particular.
	Some pessimists argue that, as a fallback against not reaching the 2050 targets, the international community should contemplate a plan B: to be fatalistic about the rise in CO2 but somehow intervene globally to combat its warming effects, for example by putting aerosols in the upper atmosphere or even huge sunshades in space. Such geo-engineering would not solve climate change but would at best buy time, probably at inordinate cost. Indeed, it is by no means clear that any such scheme is feasible. The political problems may be overwhelming. Any effective adaptation policy depends on being able to anticipate not just the mean global temperature rise but also the actual regional impacts. Even more confidence in those predictions will be needed before venturing actively to change the climate. The Royal Society has embarked on a study of geo-engineering. We think that it is at least worth while to clarify what makes sense and what does not. Our study may well put a damper on some enthusiasms and reveal why there is no realistic alternative to mitigation efforts.
	Finally, I add my voice to other speakers in emphasising that 2009 is an especially crucial year. Political decisions made this year at the G20 and in Copenhagen will resonate decades ahead. That is why today's debate is timely as well as important, and why we should be grateful to the noble Lord, Lord Browne, for initiating it. The UK is only 2 per cent of the problem—that is our projected share of global emissions. But we can surely contribute far more than 2 per cent to the solution, both through our scientific and technical expertise and through our political influence in international fora.

Lord May of Oxford: My Lords, I join others in expressing appreciation to the noble Lord, Lord Browne, for initiating this important debate. I declare some interests. The noble Lord, Lord Rees, and I strongly identify with the Royal Society's interests and energetic activities in respect to climate change. I am also a member of the Climate Change Committee.
	I want to focus on two aspects of the political challenges of addressing climate change. Some will find the first a rather quirky or perhaps excessively abstract comment on some of the basic underlying evolutionary-related aspects of the problem. On the other hand, the second is very practical and I hope will reassure the noble Lord, Lord Broers, that I have not forgotten my undergraduate training as a chemical engineer.
	At the heart of the political challenges that face a global response to ameliorating climate change is what an evolutionary biologist would call the problem of the evolution of co-operation. It is the largest and most important unsolved problem in evolutionary biology. The noble Lord, Lord Giddens, touched on it. In this year in which there is a plethora of activity commemorating the 200th anniversary of Darwin's birth and the 150th anniversary of the Origin of Species, it is interesting to remember that in his day evolutionary biology confronted many problems, not least the fact that the sun could not have been burning for more than a couple of million years. Those huge problems have all essentially been resolved in broad outline with the exception of an understanding of how co-operative behaviour in complex societies appeared and is maintained. Among prairie dogs or marmots one individual will be the guardian issuing warning calls which benefit the whole community but put that individual at extra risk. Individuals in these small groups take turns to issue the warning calls, paying a small cost for a much bigger benefit. Why does it not work? It is because the individual who cheats and does not give calls is at less risk and leaves more descendants. That paradox has been resolved for small groups of closely related individuals and probably worked for us when we were hunter gatherers. However, the origins and maintenance of our complex societies are not at all understood.
	There is a huge and expanding volume of academic research. If you are an evolutionary biologist, it is cast in metaphors of the prisoner's dilemma. If you are an ecologist, it is cast in metaphors of The Tragedy of the Commons. If you are an economist, it is cast in metaphors of the free rider problem. Essentially, however, all this work, deals with co-operative alliances among equals. As the noble Lord, Lord Hannay, reminded us, our problem in relation to international co-operation on climate change is further complicated by the fact that we need the world's nation states to collaborate in equitable proportions. To underline that, the OECD countries have a seventh of the world's population, own half the GDP and are putting half the CO2 into the atmosphere. In addition, 80 per cent of the carbon that has been added by burning fossil fuels, and which is typically resident for 100 years, has been put there by the OECD countries. Therefore, we need to act but in equitable proportions. As the noble Lord, Lord Giddens, reminded us, we come together with no evolutionary experience, neither biological evolution nor cultural evolution, of acting today on behalf of tomorrow. Therefore, it is not surprising that when political leaders get together, their horizon is the next election, not the next generation. It is not surprising that "I will if you will" shades into "I won't if you won't" or even, as we have seen recently in the EU, "I won't even if you will".
	That is a fairly gloomy beginning. Against that background my second theme is a good deal more positive. The UK is, indeed, a leader on this issue internationally. We forget that Tony Blair's first party conference speech in 1997 majored on climate change. He asked me, as the then Chief Scientific Adviser, to prepare an essay to hand out at the party conference, which was against the Civil Service rules. Commendably and with typical wisdom, the noble Lord, Lord Butler, found a way to square that circle.
	As the noble Lord, Lord Browne, reminded us, it is also true that the Government, faced with the paradoxes that the noble Lord, Lord Giddens, and I have just put in more abstract terms, have acted somewhat more slowly and diffidently than many would have wished. However, we should not forget that the Government established the Climate Change Committee a year before it formally existed so that it could produce its first report within a week or two of the Climate Change Bill passing into law.
	My second point derives from that. I do not think that we emphasise sufficiently strongly that even if international co-operation lags, many, and arguably most, of the things that are outlined in the first report of the Climate Change Committee, and which the Government are thereby more or less committed to carry out, will benefit us and will have advantages for the UK, even if others do not do their bit and we fail to hold global warming below thresholds such as the aimed for 2 degrees or even 3 degrees—an outcome which I fear is quite likely. That is to say, even if others do not play their part, the cost of many of the activities foreshadowed for us is not necessarily a positive one. It can be a negative cost, a benefit, but is not necessarily a competitive disadvantage. I give some examples. Some of them even resonate with putative solutions for aspects of the financial crisis. Public spending could be directed at retro fitting houses with better insulation and introducing tighter regulations when the building industry recovers to enable it to build houses that are more fit for tomorrow's purpose. That will involve an initial small cost but it will not happen unless we tighten building regulations, train inspectors to enforce them and change planning laws to stop developers building on floodplains. Benefits could be delivered within the lifetime of the people buying such houses. We should take those beneficial actions no matter what others do.
	Decarbonising electricity, of which many noble Lords have spoken, offers clear benefits in energy security in a world in which oil will become pricier, albeit with fluctuating prices, as it becomes less abundant and we pass "peak oil". Better transport in and between cities can offer improvements in the lives of those who live in overly congested cities.
	One of my hobby horses is that we too easily forget that when we were hunter gatherers, we spent typically a tenth of a calorie of metabolic energy to put a calorie in our mouth; 100 years ago, with the advances of scientific agriculture, we spent a calorie of fossil fuel energy subsidy—subsidised energy—to put a calorie on the table. Today, we spend 10 calories to put a calorie on the table. Much of that is used at the production stage and some for transportation. The production stage wastes energy by taking the nutrients out to make things snap, crackle and pop and then uses a bit more energy to put something back in. We could contribute to combating both climate change and obesity by looking hard at what we do with food.
	In summary, the political, economic and quality-of-life costs if global co-operative activity falls short are very real and very serious, but many benefits will accrue if we remain firmly committed to what is embodied in the Climate Change Act. All we need here is firm political leadership.

Baroness Flather: My Lords, I was totally dazzled by the expertise of the noble Lord, Lord Browne, in his opening speech. I will have to read it to understand much of it, because just by listening it was not terribly easy for someone who is not knowledgeable in the subject to understand everything. Today, as ever, there have been some amazing speeches. It is a great pleasure to follow my noble friend Lord May. On the other occasion when I followed him, I was also absolutely gobsmacked—not a very parliamentary word—and so interested in what he said. He says it very clearly and plainly and people like me can understand him. I thank him and other noble Lords for what they have said today.
	I have no expertise, experience or real knowledge on this subject, but I am going to talk about an issue which is very closely connected but which is not talked about when this issue is discussed. Today, only the noble Lord, Lord Dixon-Smith, has mentioned the "P" word—population, which is what I will focus on. We are asked to change light bulbs, conserve water, recycle, have cleaner cars and so on, and we should be doing all those things anyway. They are good for us, good for our neighbours and they are good things to do. Why should we waste resources? That follows a general way of thinking. I am sure that many people are still not doing those things, and that is sad.
	The PC—politically correct—lobby has made sure that we do not talk about a very important reason for the changes in the world's climate: population increase. There has been enormous population increase in the past 100 years, and it is a factor globally, particularly in developing countries. It has an enormous impact in all sorts of ways, certainly on global warming and on social collapse. How many times do you hear population increase connected with environmental degradation, water shortage and global warming? It leads to all those things, but we do not talk about it.
	We are now 6.7 billion people, and it is projected that there will be 2 billion more people on earth by 2050, which is one of the target dates that we have been discussing when we talk about how we are going to reduce carbon emissions. If there are 2 billion more people, they will need to be fed and looked after, and they will need water. At the moment, there are still a lot of people who survive on food aid. Is it possible that 2 billion more people, who are likely to be in the developing and the poorest countries, will be able to survive on their own? They will not. We need to think about this and how we will look at this issue and bring it out into the open and discuss it.
	I have written here that the liberals—with a small "L"—said that the poor consume less. I will not say that now, because the noble Lord, Lord May, has said it; and indeed they do consume less. But that is so because they have less. There is no more for them to consume than what they have. They are cutting down the woods and they are collecting whatever is available. A woman has to collect wood to cook food for herself and her children. She has to take water wherever the water is from, and she has to look at her life as surviving another day. It is not like she has access to things and is holding herself back from consuming; they have nothing. The deserts will grow, the amount of rainfall will reduce, droughts will come—they are already. We know what is happening in the world. Disease is increasing, particularly in Africa, and, as one of your Lordships' reports has said, that is because of population increase. People are living closer together, so there is disease. We must take these things into account when we talk about global warming and environmental degradation.
	Africa's population is set to more than double by 2050. It is 1 billion now, and it is expected to become 2.3 billion. We are sending food aid now. What will our grandchildren be doing in 2050? What will the countries that now send aid be trying to do? Africa cannot feed itself now. Will it feed itself when it has more than double the population? I think not. The political will is not there in Africa to look after its people. To me, that is one of the saddest things about Africa.
	A poor woman has very little access to the real necessities of life. She has very little access to take control of her fertility. Fathers do not take responsibility for family planning; they never have done, not even in developed countries. It is always the women who look after these issues, and the women in poor countries do not have access and they do not have power. In families in Africa, it is very often the woman alone who brings up the children. Would it not be better for her to have fewer children and give them better health and possibly get them to school? We need much more action on these sorts of issues.
	Former President Bush unilaterally decided to stop funding the UNFPA, because it supported China's one-child policy. That was such an amazing decision. The UNFPA had nothing to do with China's one-child policy; China itself decided that policy, which has stopped 300 million more Chinese from coming into the world. When we look at China, we must accept that it would not have had the growth that it has had if it did not have the one-child policy. However, I am not advocating that. I am simply advocating that we bring this issue out into the open. It is a major contributor to all the things that everyone has been talking about. Unless we do so, there will be no change of any kind. We need to make that change.
	I finish by referring to the seventh millennium development goal: to strive for environmental stability. The targets it sets are to integrate sustainable development into policies and programmes, reverse the loss of national resources, improve access to safe drinking water and improve the lot of millions living in slum dwellings. It is as plain as a pikestaff that none of those can be achieved without tackling the population issue.

Lord Redesdale: My Lords, first, I thank the noble Lord, Lord Browne, for initiating this debate. I shall probably disagree with many of his points, but I shall discuss that later.
	The politics of climate change has been dealt with in minutiae by many of us who have taken part in these debates over the past few years—we have had the Climate Change Bill, the Energy Bill and numerous debates. It is most encouraging to speak in a debate in which there has been no question that climate change is happening. That is a step forward in this House, where it has been much more a question of how fast changes should take place. My problem with the politics of climate change is that we are still discussing targets, as thought setting them will be the solution. I realise—and the excellent speech of the noble Lord, Lord Hannay, made it clear—how important these targets are at an international level and that they have their place.
	However, I have an issue which was borne out when dealing with the Energy Bill and through going to a large number of conferences. We are setting targets that might not be achievable for a number of reasons—technology, and because we and other countries are setting targets that we know none of us will meet. That is a real problem. My view of the politics of this is that we should instead be thinking about building the infrastructure. We should also understand what the targets really mean, because we are talking about an 80 per cent reduction in emissions. Some scientists are talking about an even greater reduction, because we may well have already passed the tipping point.
	That means, in reality, that people will be unable to live their lives in the way that they are now. We must seriously change how we live our lives, but that is not being taken on board. It is not a bad thing—for example, SUVs were not around 10 or 15 years ago on the school run, and they probably will not be around in a few years. People will have to change how they lead their lives.
	I found the recent announcement on the Heathrow expansion very depressing, but perhaps it is only me who feels like that. Although the arguments were put in favour, I have been to many conferences where there was talk of us running short of peak oil in the next 20 or 30 years. However, the Heathrow expansion will take at least a decade to come into commission and it will have a certain lifespan. Where will the traffic for Heathrow come from in 20 years? There certainly will be no cheap awayday flights to Prague. Flying will, by necessity, become very expensive and we will probably return to the situation of 30 years ago, when only a small number of people could afford to fly. Therefore, we will be building an infrastructure which will break our carbon barriers, but will never live up to expectation. It is a short-term commitment to how we view growth in the economy.
	This is why I have a slight problem with the speech of the noble Lord, Lord Browne. I very much take on board that the only game in town is the ETS and carbon trading. It is to be welcomed that President Obama is talking about widening the trading fields. However, perhaps unusually, I am a carbon-trade sceptic. I do not believe that carbon trading itself will lead to a reduction in the amount of carbon dioxide produced, because there are many flaws and pitfalls in the system. If we are to throw ourselves at market forces, we only have to think about the banking crisis to realise how that can go horribly wrong. The noble Lord, Lord Smith, mentioned recession. How often have I seen reports in the press recently that big green projects were under immediate threat because of recession? We are saying, "Okay, we have market forces, and we have these targets, but if there is a problem in the economy we cannot meet the targets because we cannot afford them".
	I have met a large number of carbon traders who have not given me a great deal of hope on the issue. However, carbon trading could work well on a macro level. I do not believe that market forces will be the real driver; it will be regulation by the Government. I have spoken to a large number of power companies over the years which have talked about what type of power stations they will build and how they will meet the so-called decarbonised electricity grid. Most of the companies say that they are hanging back and not making decisions because of the real issue of whether they can meet the carbon targets set by the Government, who have not come forward with them. That creates a real problem in the system, because if no new power stations are built, we cannot see how the electricity sector will be developed.
	I very much hope that we look at this issue in the future. My problem is that while I believe that coal should not be part of the mix because of its carbon content, I cannot see a way of meeting our energy requirements without including coal. Therefore, the only way that we could include coal would be through carbon capture and storage technologies. However, the problem is that we are only talking about one demonstration plant, we are not realistically saying how we can use that technology in all power stations within a certain time frame. We are talking about 20 or 30 years ahead. The world does not have 20 or 30 years. I very much welcome the efforts undertaken by the Chinese Government. They have already put forward, and are starting to construct, more than one demonstration plant. It is unfortunate that a few years ago we said that we were going to build a demonstration plant and export that technology to the world, whereas it very much looks as though that technology will be exported to us over the next few years.
	Looking to the future, the Government have made some positive gestures. We talked at Question Time about the use of light bulbs which will save some 5 million tonnes of carbon. It is one of the changes that people will have to get used to. Indeed, there will be a spur to the market place; the papers today reported a new type of light bulb which will be extremely bright for 75 per cent less energy. That is important.
	There are areas where the Government have failed, especially in the Energy Bill. I was disappointed that the Government have not moved forward on smart meters, considering the speed that such a programme could be rolled out. One issue is that Ofgem has not worked out what sort of market model there should be—whether meters should be given to individual customers or whether the programme should be carried out street by street. Holding that system up on that basis is unfortunate, because that would be one of the greatest ways of bringing about behavioural change.
	We shall have to bring about behavioural change. I have been doing a great deal of work on energy efficiency in houses, especially regarding energy performance certificates. The Government, in meeting their targets, will have to introduce regulations that produce more than the carrot of economic benefit for people if they carry out the change. At some point, they will have to think of imposing a regulatory stick if people do not change; for example, not allowing them to complete on conveyancing if a house is not insulated to the correct levels, and making it impossible to sell a house with a G-rated, rather than an A-rated, boiler. Such changes could be simple to make, and if they were put into the process, people would carry them out without thinking about them. As with light bulbs, they would be a requirement and, therefore, people would undertake them.
	Some future technologies could help and one of them, in which I declare an interest, is anaerobic digestion. I have just become the chairman of the Anaerobic Digestion and Biogas Association, whose aim is not to set up a working group to discuss what sort of standards it should be reaching but to build, over the next 10 to 15 years, 1,000 AD plants in this country. This is an old technology. Germany has more than 3,500 plants; Austria and Italy have 400 plants apiece; Denmark has a few hundred; and, of large-scale plants, we have 10. When we talk about carbon, we should think not only about the electricity grid but about the gas grid as well, because that is a massive source of carbon dioxide. It has just been shown by the national grid that 50 per cent of our domestic gas could come from anaerobic digestion. If Germany can produce that many plants, we should be able to do so. It is a mature technology that can be brought here to deal with many of our waste issues.
	I want to end by talking about the politics of this matter. There is one big problem affects every Government. We talk about moving forward as quickly as possible but every single industry involved in energy efficiency, low-carbon products or microgeneration that I have talked to always has problems with regulation. Yesterday, I was lobbied by a company called Living Fuels, which takes waste chip oil from prisons, schools and other organisations and puts it through a power station that can produce six megawatts of power. I should declare that when I met the people from that company yesterday, I paid for tea. I say that just in case, in the present climate, people think that I am doing this for any other reason.
	The company uses a fuel called LF100. The problem is that there was a court case to decide how the fuel should be designated, which affects how it should be dealt with. It was decided that the fuel should be designated in a specific way, and the court said that the Environment Agency and Defra should work out regulations to allow the company to move forward. The trouble is that the company has now been waiting eight and a half months for those regulations to be brought forward and, until that happens, it cannot do anything. That could kill a fantastically good industry. The trouble with waste oil is that it goes down the drains and costs the water companies millions of pounds to clear. I will pass on the details to the Minister and hope that he can meet representatives from the company. One problem with the politics is that sometimes regulation gets in the way of moving towards a low-carbon economy.

Baroness Wilcox: My Lords, I thank the noble Lord, Lord Browne of Madingley, for initiating this timely debate on the political aspects of addressing climate change. I have witnessed something of a masterclass here today. When I think that in your Lordships' House we have some of the greatest scientists and engineers in the world, I sometimes wonder what the press are worrying about.
	I shall confine myself to five questions, which I hope the Minister will be able to answer either today or, if time is short, in writing. The questions capture what I want to say.
	I am sure we would agree that the international community must act with real urgency to reach agreement on a successor treaty to Kyoto in order to reduce global emissions, keep global temperature rises below 2 degrees Celsius and avoid catastrophic climate change. Therefore, my first question is: what action has the Minister's department taken to engage with countries such as the United States and China to ensure that they are on board at the next round of discussions on the post-Kyoto framework in Copenhagen?
	Today, we have heard that at home the Government have already conceded that they will miss their target to cut carbon emissions by 20 per cent by 2010 against the 1990 baseline. Does the Minister agree that the Government must achieve more in tackling climate change at home in order to lead by example on the world stage?
	In March 2008, the Sustainable Development Commission found that,
	"government as a whole needs to take radical action to put its own house in order if it is to be in a position to lead by example".
	More than half of all government departments have increased carbon emissions since 1999-2000 and nearly two-thirds of departments are not on track to meet their carbon reduction targets. So my next question is: what steps is the Minister's department taking to tackle this issue head-on and reduce emissions from the civil estate as an example to us all?
	I am with the noble Lords, Lord Smith and Lord Redesdale, in not joining the Government in their approval of a third runway at Heathrow, regardless of the fact that the additional greenhouse gas emissions from the expansion will compromise the Government's legal obligation to achieve an 80 per cent reduction in emissions by 2050 under the Climate Change Act. Does the Minister agree that his Government are saying one thing while doing another on climate change policy and that, unless there is joined-up policy right across Whitehall, it will not be possible to achieve the legal obligations of the Climate Change Act?
	I come to my last question. The new United States Administration under President Barack Obama is showing very promising signs not only on domestic action on clean energy technologies but also on a determination to re-engage with the international community in securing a post-Kyoto deal. However, at this key moment of hope, we see that the European Union, which until now has been recognised as a global leader on climate action, is weakening that position due to lobbying from some of its member states. The Word Wildlife Fund stated that the European Union played its "worst role ever" at the Poznan climate summit last month. Can the Minister assure the House that his Government will do all that they can to ensure that action on climate change remains a top priority at European Union level and that our collective voice will not be watered down at this vital time, when the United States is finally to re-engage on this issue?
	The noble Lord, Lord Browne, said in his very fine speech that climate change must be a vision for the future, at the heart of society. He said that we cannot go forward in isolation. On this, I think we all agree. However, in order to win hearts, all people will need to understand the language that we are speaking. In this country, we need plain English so that we can all join in the debate, take ownership of it, see the opportunity for jobs and training and the potential to save money, and see that for us it will be a better life.
	Finally, moving forward in the ways that we have heard today will cost the earth. Therefore, the political aspect of climate change is one that Governments all over the world will have to face, and that is to win the hearts and minds of the voters.

Lord Hunt of Kings Heath: My Lords, this has been a remarkable debate. Like other noble Lords, I thank the noble Lord, Lord Browne, for securing it and congratulate him not just on the excellence of his opening speech but on his track record, in which he has shown true global leadership. We are indebted to him. The debate has been extraordinarily wide ranging. As the noble Baroness, Lady Wilcox, said, we have extraordinary expertise, including on science, engineering and diplomacy, and we have heard an extraordinary range of speeches on issues from world population to security of energy and all the critical problems that we need to face in dealing with climate change.
	The debate comes at the start of what we hope will be a momentous year leading up to the discussions and, I hope, agreement at Copenhagen in December. If there is one message that comes home to us all today, it is that we have to work harder than ever to build the political will and economic conditions necessary to convince the world that a shift to a low-carbon economy is not a threat but a global opportunity.
	As my noble friend Lord Smith and other noble Lords have shown, the latest scientific evidence is clear that climate change is a bigger and more urgent challenge than has previously been understood and the effects are with us now. Last year's report from the independent Committee on Climate Change has surely shown an even stronger link between human activities and climate change. We know, too, that the impacts of climate change pose a threat to the very security, prosperity and development of nations. I very much agree with the noble Lord, Lord Browne, that action must be taken now.
	In short, there are four areas where the Government are determined to drive forward progress. First, we need robust mechanisms in place at national, EU and international level to secure a global deal in Copenhagen. Secondly, we must have ambitious targets, but we need to accelerate action to make sure that we meet them; I am not as pessimistic as the noble Lord, Lord Redesdale, on that. Thirdly, we have to demonstrate that we can be pro-growth and pro-fairness as we tackle climate change. Fourthly, and extremely relevant to the title of today's debate, we have to take public opinion with us.
	I agree with the noble Baroness, Lady Wilcox, that part of doing that is using a language that people can understand. As someone new to this field, I still struggle with the words "climate change mitigation" and "climate change adaptation". The problem is that only a small group of people understand and talk this language; if they think that anyone else understands it, I can tell them that we do not. We need to work hard if we are to meet the challenge identified by both my noble friend Lord Giddens and the noble Lord, Lord May. We have to think about the language that we use in the future.
	The remarks of the noble Lord, Lord May, and his record as chief scientist and as a member of the Committee on Climate Change speak for themselves. It was a remarkable contribution, in which he talked about the evolution of co-operation and the requirement for nations to collaborate in equitable proportions. He reminded us of the responsibility of OECD countries in terms of greenhouse gas emissions. I thought that his analysis of why small upfront costs for this country could produce major paybacks, whatever others do, and show some early returns was a positive message, which was echoed by the noble Lord, Lord Rees. The advice of the Committee on Climate Change indicates that the costs to this country of meeting the 80 per cent target are affordable. The implication of its advice is that the sooner we get on with this task, the lower the end cost will be.
	My noble friend Lord Giddens talked about the political issues and the challenges of taking action in relation to a long-term risk. He spoke of the problems of getting public support for action, which, if delayed, could make catastrophe unavoidable. He called it the paradox. I thought that we had an example of that this morning with the Question on light bulbs. If ever there was a no-brainer of a decision, it is the one taken on light bulbs. Yet we need only contemplate the opposition even in your Lordships' House—a more rational place is not to be found anywhere, I am sure—to see that such a matter runs into trouble and difficulty. That shows the scale of the challenge.
	I agree with my noble friend that too much focus on fear is perhaps not likely to produce the change in behaviour and attitude that is required. Equally, going back to what the noble Baroness, Lady Wilcox, said, we must have a straight conversation with the people of this country in a language that they can understand. I pay tribute to the Environment Agency and my noble friend Lord Smith, as they have a major role to play in this communication. Flooding is a particular area of the Environment Agency's expertise. I also mention the extraordinary work at Hadley with the UK climate projections that are due to be published in the next few months. Although it will be sobering to see the forecasts and their impact, none the less they may enable us to have a serious conversation not just with the public but with all the businesses and public sector organisations that have to think now about the changes that they will have to make in relation to both mitigation and adaptation. It is extremely important work in parallel with that of the Environment Agency.
	My noble friend asked about visible and progressive business leaders being seen to take a leading role. I agree that we have business champions but clearly they do not have the visibility at present. He has set us a challenge to see what more we can do. The great benefit of the Stern review and the Committee on Climate Change, chaired by the noble Lord, Lord Turner, is that they comprised, if I can describe them as such, hard-headed people who did not come with any particular angle but were seen to do robust analysis. That has had a huge impact in getting people not just in this country but in many others to recognise that we face a most serious problem.
	I say to the noble Baroness, Lady Wilcox, that of course I accept that government departments must practise what they preach and that we have not done all that we should. The development of carbon budgets over the next year or two will be a powerful way of ensuring that they do just that. I reject what she and the noble Lords, Lord Smith and Lord Redesdale, said about Heathrow. That was well debated in the other place yesterday but the point is that—apart from the stringent controls on any further development at Heathrow—under the EU Emissions Trading Scheme the expansion will not lead to any increase in emissions. We have also announced a new target to get aviation emissions in 2050 below 2005 levels. I understand where the noble Lord, Lord Redesdale, is coming from, but he does not like the target approach in the first place. Provided that the target approach has integrity—I agree with him about that—there should be flexibility within it.
	The noble Lords, Lord Browne, Lord Hannay and Lord Smith, referred to the international negotiations. Clearly the next few months will be critical. I note the remarks of the noble Lord, Lord Hannay, about the recent European negotiations. He was right to identify that they were challenging. None the less, we have reached agreement on strengthening the EU ETS and we have secured political agreement on the EU renewables directive. However, the critical decisions and negotiations are ahead of us. I believe that the UK can play a leading role not least because of the passage of the Climate Change Act and the 80 per cent GHG emission reduction by 2050. One should not underestimate the impact that that has had. I know from my discussions with Ministers in a number of other countries that it has been noticed. We have to make the most of it.
	The noble Lord, Lord Hannay, rightly referred to burden sharing. Developed countries have to take the lead and there is a need for differentiation of actions between developing countries. It will then be a challenge to agree on how those actions can best be measured, reported and verified. However, we are very anxious to do that.
	Climate change is already a reality, so adaptation must be considered a priority and part of the Copenhagen agreement. Part of that must be for developed countries to improve access to new, additional and predictable financial flows and to help developing countries to build their capacity to meet their commitments. I say to my noble friend Lord Giddens that part of our work with other countries is done under memorandums of understanding. Since I have been in this job, I have been impressed to know how much we are doing on that.
	The noble Lord, Lord Hannay, also talked about supporting developing countries. It is interesting that, in the negotiations around the EU Emissions Trading Scheme, the Council adopted a political declaration indicating member states' willingness to spend at least half of the revenues to tackle climate change in the EU and developing countries.
	We all have great expectations of the new US Administration. We are looking forward to working with them and offering any support that we can towards the US taking early domestic action on climate and energy and engaging in international negotiations. We are also keen to share UK and EU experience on climate and energy policies, such as carbon trading.
	On the economy, I agree with all noble Lords that the key message from this debate is that the economic downturn does not, cannot and should not mean a retreat from equally important longer-term objectives. Indeed, they can and must go hand in hand. The Stern review of the economics of climate change demonstrated the consequences if we were to fall for the argument that in the economic downturn we cannot afford to invest in climate change mitigation and adaptations. We cannot go down that path.
	I believe that building a low-carbon economy in this country offers great prospects for our future. It is clearly the way we should be going. I know that a number of noble Lords, including my noble friend Lord Smith, were concerned about whether the Government have got their act together in this area. We will set out our vision of how companies can take advantage of the green opportunities in our economy in our low-carbon industrial strategy in the summer. I echo the remarks made by the noble Lord, Lord Broers, that, just as we rely on our extraordinary science base, I acknowledge the expertise and brilliance of our engineers. His point about ensuring that the advice of engineers is fully to hand in policy development was very well made.
	It is remarkable that, whatever the debate, we often come back to energy supply, energy security and future requirements. It is clear that we are going to need a wide variety of technologies, whether renewables, nuclear or carbon capture and storage, as well as coal. The signs are generally positive on future investments, although, given the global downturn, there are some immediate issues that need to be faced up to. The takeover of British Energy by EDF was the foundation for the new nuclear that is starting to be built, with the first new station due to be online in 2017. Other companies are now interested in new nuclear. We are also seeing investment in gas storage facilities.
	We have been set a tough target on renewables. We need to do everything that we can to make sure that we reach it and take advantage of the renewables technology that we have developed in this country. My noble friend Lord Smith talked about tidal power and marine power. I agree that we have a technological lead. Let us make sure that, in contrast with previous efforts in the energy sector, we take advantage of that.
	The noble Lord, Lord Dixon-Smith, spoke about the interesting link between farming, energy and climate change. He reminded us that farming can have a positive role in relation to adaptation. We need to focus on that. For example, many farmers have taken the initiative on anaerobic digestion. I will refer the issue raised by the noble Lord, Lord Redesdale; I understand that it is a matter for the Environment Agency, to which I will make sure that his remarks are referred.
	I say to the noble Lords, Lord Rees and Lord Dixon-Smith, that we are one of only four countries that are committed to supporting a commercial-scale project demonstrating the full chain of CCS. When it is operational in 2014, it is likely to be the first commercial-scale demonstration of the full chain of CCS with post-combustion capture technology on a coal-fired power station. This is very expensive, but we have been active in promoting the competition and in negotiating in Europe. I was disappointed by those remarks that suggested that in some way the UK is behind the curve on this.
	I agree with the noble Lord, Lord Dixon-Smith, about energy saving. Alongside the other changes that need to be made, much can be done in the energy saving field. I think that it was the noble Lord, Lord May, who suggested that it was an example of where some smallish upfront investment would show returns very quickly. He will know that that argument is frequently made to our friends in Her Majesty's Treasury, but it is sometimes difficult to convince them. It is a good example of how, although we talk about climate change—certainly its worst effects—being a long time ahead, some small changes now can make an immediate improvement. That is one way of countering the danger of pessimism that could inhibit appropriate action. It is one of my worries that, when we talk about targets and people talk about the possibility of never reaching them, there is a danger that people think that it is not worth trying. Part of being realistic with the public is to remember that actions can be taken that can show an immediate effect.
	I thought that the remarks made by the noble Baroness, Lady Flather, about population issues were very interesting, particularly in the face of the population predictions over the next 10, 20 or 30 years. Alongside energy security and food security, population is an important matter to consider.
	At the beginning of my speech, I said that I thought that the debate had been quite remarkable. I end by saying that it has been a real privilege to have taken part in it. The noble Lord, Lord Browne, has done us a great service. Climate change represents probably the biggest challenge that we will all face. It is a huge challenge. It presents many difficulties for politicians. Some of them are immediate, because of the difficult decisions that have to be made, but we should be in no doubt that this Government are determined to make the right decisions. We are in a good position to give global leadership, but there is an awful lot to be done, particularly over the next few months leading up to Copenhagen.

Lord Browne of Madingley: My Lords, I thank everyone who has contributed to the debate. I had hoped that this would be an opportunity to take the debate forward, to keep the subject at the centre of society and to think of the global opportunities, not just the threats. In those matters, I was not disappointed. I thank the Minister for his response. This Government have done a lot to promote the issue of climate change on the international stage—I hope that that continues—and have displayed serious ambition with the targets adopted in the Climate Change Act. I am in no doubt that we have the right vision of how to tackle climate change. What still remains is to overcome the political challenges that stand in our way. I beg leave to withdraw the Motion.
	Motion withdrawn.

Communications: Digital Britain
	 — 
	Statement

Lord Carter of Barnes: My Lords, with the leave of the House, I will now repeat a Statement made in another place by my right honourable friend the Secretary of State for Culture, Media and Sport. The statement is as follows.
	"Last October, the Secretary of State for Business, Enterprise and Regulatory Reform and the Secretary of State for Culture, Media and Sport announced that I would undertake a comprehensive review of Britain's digital, communication and creative sectors and make recommendations to place the country in a position to prosper in the digital age.
	Today, the Government are publishing the interim findings. The interim report starts from the recognition that these sectors are both important in their own right—worth more than £52 billion a year, with 2 to 3 million people directly employed—but fundamental to the way all businesses operate and how we all increasingly live our lives. Capable communications systems can help all British businesses become more efficient and productive, offering the potential to reduce travel. High-quality information and entertainment enhance our democracy, improve our quality of life and define our culture. In short, building a digital Britain is about securing a competitive, low-carbon, productive and creative economy in the next five to 10 years.
	It is worth reminding the House of Britain's traditional strength in these industries. The worldwide web was invented by British ingenuity. It was here that GSM was created and established as the global standard for first-generation digital mobile communications. But this strength is not just in our distribution and communications systems. Our television, music, film, games, advertising and software industries are world-leading. As Digital Britain points out, the OECD estimates that the UK cultural and creative sector, at just under 6 per cent of GDP, is relatively more important then its equivalent in the US, Canada, France and Australia; UNESCO considers the UK to be the world's biggest exporter of cultural goods, surpassing even the United States.
	However, we cannot be complacent. The online age is rewriting the rules, changing the way all of us access content and the old business models that have underpinned Britain's creative industries. The challenge now is this: how to build the networks and infrastructure that help businesses and consumers get the most from the digital age; and funding the quality content that enhances our culture and our economy.
	The Government's thinking in these areas has been shaped by a series of important reviews, including: the Caio review, on next-generation broadband access; the work of the digital radio working group; the Byron review, on children and new technology, which led to the establishment of the UK Council for Child Internet Safety; the convergence think tank; the digital inclusion action plan; and the Creative Britain strategy.
	Digital Britain brings these strands of work together into a clear and comprehensive framework with five public policy ambitions at its heart: first, to upgrade and modernise our digital networks—wired, wireless and broadcast; secondly, to secure a dynamic investment climate for British digital content, applications and services; thirdly, to secure a wide range of high quality UK-made public service content for UK citizens and consumers, underpinning a healthy democracy; fourthly, to ensure fair access for all and the ability for everyone to take part in the communications revolution; and fifthly, to develop the infrastructure, skills and take-up to enable widespread online delivery of public services.
	The interim report makes 22 recommendations to achieve these objectives, and I will set some out for the House today. Britain must always be ready to benefit from the latest advances in technology, so we will establish a group to assess measures to underpin existing market-led investment plans for next-generation access networks. An umbrella body will also be set up to provide technical advice and support to local and community networks. To facilitate the move to next-generation mobile services, we are specifying a wireless radio spectrum modernisation programme. In addition, the Government are committing to enabling digital audio broadcasting to be a primary distribution network for radio in the UK and will create a digital migration plan for radio. We will consider how the digital TV switchover help scheme can contribute towards this agenda.
	We will maintain our creative strength only if we find new ways of paying for and sustaining creative content in the online age. We will therefore explore the potential for a new rights agency to be established and, following consultation on how to tackle unlawful file-sharing, we propose to legislate to require internet service providers to notify alleged significant infringers that their conduct is unlawful.
	Our third objective, high quality UK-made public service content, will be achieved by sustaining public service broadcasting provision from the BBC and beyond. The report identifies news at local, regional and national level, and children's programming as among the key priorities.
	The BBC as an enabling force is central to this: strong and secure in its own future, working in partnership with others to deliver these objectives. We will also explore how we can establish a sustainable public service organisation which offers scale and reach alongside the BBC, building on the strength of Channel 4. We will consider options to ensure plurality of provision of news inthe regions and nations, and we are asking the Office of Fair Trading, together with Ofcom, to look at the local and regional media sector in the context of the media merger regime. We will also consider the evolving relationship between independent producers and commissioners to ensure we have the appropriate rights-holding arrangements for a multi-platform future.
	Our fourth objective of fairness and access is, of course, crucial to delivering the Government's policy of an inclusive society where new opportunities are available to all and nobody is left behind. So we are developing plans to move towards a universal service commitment for broadband and digital services to include options up to 2 megabits per second, building on the approach to postal services and telephones in centuries past. We will also ensure that public services online are designedfor ease of use by the widest range of citizens.
	Lastly, to help people navigate this vast and often-changing world, the report makes recommendations to improve media literacy and, in particular, to give parents the information and tools necessary to protect children from harmful or inappropriate content.
	The Government have today set out a vision to make sure that Britain reaps the full economic and social benefits of the digital age. An intensive period of discussions with industry partners and others must now begin to turn these initial conclusions into firm solutions. A final report will be presented to Parliament by the summer.
	In publishing this interim report today, and making this Statement to the House, we seek to invite Members from all sides of the House to engage in the debate around these fundamental questions that will shape our country's economy and society in this century".
	I commend the Statement to the House.

Lord Luke: My Lords, I thank the Minister for repeating the Statement and for the advance notice of both the Statement and his report. However, I am sorry to say that it was something of an anti-climax. The report will be greatly disappointing for anyone looking for concrete action from the Government to equip Britain for the digital economy.
	We all recognise the huge value of the digital and communications sector to the United Kingdom. It is vital for our long-term prosperity that we develop a world-class, highly competitive and universally accessible digital sector. Indeed, given the Government's deepening recession, I should have thought that it would become a priority to look at that sector, which has huge potential for growth in productivity.
	Britain has great natural strengths in creating digital content, but we do less well on the delivery of that content. We have fallen down the league table of digital adoption skills. Indeed, 40 per cent of households have no broadband at all, with connections even falling last year. Yet the interim report published today conveys no sense of urgency. There are no concrete pledges and only eight new reviews. Does the Minister not recognise that the digital, communication and creative sectors of our economy, and indeed far beyond, will have been waiting to hear what steps the Government will take to help usher in a fully digital age, and that the promise we have received of more reviews is hardly inspiring? Is there any chance that the full report, which is promised for the summer, might be more positive?
	The overall impression given by the interim report is that this Government are treading water. We have already had numerous reviews on these issues: from the Cox review of creativity in business, in March to December 2005, to the Caio review and report, The Next Phase of Broadband UK, in February to September 2008, and the ongoing Broadband Stakeholder Group, among others.
	I hope that the Minister can answer questions on matters which the interim report did not make clear. The report says that the Government will,
	"work with ... operators ... to remove barriers to the development of a ... wholesale market in access to ducts".
	If BT, which owns the ducts, does not co-operate, will the Government force it to open them to other suppliers, as we Conservatives have pledged?
	On copyright protection, instead of a solution, the Government propose to set up a new quango with a new tax on internet users. Why do we need another agency when Ofcom is already equipped and able to do that job? And why should legitimate internet users have to pay for the copyright infringement of transgressors?
	On the universal service obligation for broadband, we welcome the long delayed commitment to ensuring that everyone has access, but who will pay for this? The aspiration is a fine one, but we really need to know what the Government's strategy is. The Government say that the commitment should be for 2-megabit access. Given that the national average access speed is 3.6 megabits, is not the scale of the Government's ambitions pitifully low, saying simply that they want to ensure that the whole population has access to half the current average speed by 2012? It is one thing to promise universal access to broadband, but if it is too slow to be useful, especially in rural areas, the exercise is entirely pointless.
	On peer-to-peer file sharing, the Government talk about consulting on legislation, but can the Minister tell me how ISPs are supposed to identify illegally shared files, given what happened in France, where many users simply reacted by encrypting their files when the French Government introduced similar measures?
	These are just some of the questions that must be answered, so I am dismayed that all that we have been offered is the promise of more reviews. A Conservative Government will make it a major priority to ensure that over half the population has access to high-speed broadband within five years, providing a platform for thousands of new businesses and jobs. Does the Minister agree that this should be an objective that they will deliver? The country should not have to wait for a general election for this to start; the Government need to take action now.

Lord Clement-Jones: My Lords, I join the noble Lord, Lord Luke, in thanking the Minister for repeating the Statement. In a sense, it was almost not a repetition of the Statement, as it is his own Statement in many ways.
	I very much welcome the Government's new focus on the digital economy and the creative industries. It is perhaps because of the rather reduced state of our financial services industries that we are now constantly reminded, not least at the Golden Globe awards, of the importance to Britain of those industries. I welcome the review's emphasis not only on the economics of the creative industries and digital Britain, which are important, but on the very important matter of fairness. Access is vital, and inclusion is a key objective. In all this, inclusion is one of the big challenges that we face. The problem with the review, which is much more interim than many of us expected, is that its conclusions are rather thin on the ground and it gives rise to more questions than it answered.
	My comments today from these Benches are rather more about the plumbing than the poetry of the report, to echo a phrase used by the Minister. For a start, we are very pleased with the affirmation of support for the BBC. We are also pleased with the statement that there must be a plurality of provision in public service broadcasting. The BBC should definitely not be the sole provider of PSB, and there is a clear recognition that the economic models of public service broadcasting are changing.
	Our own preference on these Benches is for partnership between the BBC and other public service broadcasters, not for top slicing. We are also completely of the view that a merger between Channel 4 and Channel 5 is not a viable option. We are rather baffled by the fact that there is no statement in the report either about top slicing or about the inadvisability of any kind of merger option. We favour some kind of co-operation between Channel 4 and BBC Worldwide, but there is very little detail in the report on that, despite the fact that Ofcom reported only very recently on precisely those aspects. This lack of conclusion about PSB is very disappointing.
	There is recognition in the report that content perhaps needs support. Indeed, support is vital in the context of particular parts of the creative industries where there is market failure of some kind and the British product is disadvantaged. We are thinking particularly about children's television and computer games. I very much hope that the Minister can assure us that he is in deep discussion with the Treasury on these issues, because tax incentives for these content-driven industries are absolutely vital.
	We also welcome some of the statements made about the migration to DAB universally, but there is very little detail in the report on the Government's aspiration for the switchover date.
	I must admit that, despite being a lawyer, I am rather confused by some of the interim review's statements about copyright. There is a statement that internet service providers will be obliged to notify individuals that their conduct is unlawful, but what happens after that? Who will be responsible for prosecution? A new rights agency is proposed, but I cannot for the life of me see why the Intellectual Property Office should not carry out those duties. Mr Lammy has stated previously that the UK will not legislate on piracy, so I find the whole set of statements in the review extremely confusing.
	Universal access to broadband is absolutely crucial. There is a lack of ambition, however. As has been mentioned, the average speed currently experienced by broadband users is something like 3.6 megabits per second, so why are we not aiming for the universal provision of super-fast broadband instead of broadband at 2 megabits per second?
	Briefly, I also welcome some of the elements of section 5.1, on education and skills in the broadband area. I welcome some of the current projects, such as Find Your Talent, which is a very welcome initiative that recognises that times are changing and that we must inspire young people to find their own way to a creative future. There is a difficulty, however. We know that there has to be personalisation and participation and that parents need to get involved, but in addition to worthwhile projects there must be an overall strategy that includes equipping teachers with the right approach and skills. We also need to encourage partnerships with cultural institutions and the creative industries. How much cross-government co-operation is taking place between the DCMS and the DCFS?
	Decisions were promised at this stage. It is disappointing that there is so little detail on PSB. We are in danger of getting behind the curve. The competitive situation with other countries has been mentioned. We must speed up our decision making. I hope that the Minister can reassure us in that respect that the final report really will be definitive.

Lord Carter of Barnes: My Lords, I thank both noble Lords for their responses to the Statement. If we are trading disappointments, I am rather disappointed by their respective disappointments. The report clearly says that it is an interim report. We have been clear from the beginning that this process would come in two stages because we were seeking to resolve some significant questions. I can but imagine what the response from the two noble Lords would have been had we brought determinative answers on every single one of these issues without any form of proper analysis, consideration or consultation.
	As both noble Lords have identified, these are profound questions about connectivity, infrastructure, content, rights and legality. We have been working on this project for 11 weeks. I struggle with the notion that we are being slow.
	The noble Lord, Lord Luke, asked specific questions on where we have offered certainties. We have offered real certainties on at least eight of the 22 areas. We have said determinatively that we will commit to digital audio broadcasting and radio. We have said determinatively that we will commit to the funding and creation of a second public service provider alongside the BBC. We have said that we will commit to the creation of a universal service commitment in broadband for the first time.
	On the point about speed raised by both the noble Lords, Lord Luke and Lord Clement-Jones, "up to 2 Mb/s" is the phraseology in the document. That would be the most ambitious universal service commitment of any country in the world. However, to be clear in the interests of the debate, we are in no way, shape or form suggesting that "up to 2 Mb/s" should be the ambition for what the country should have; far from it. We are saying that, in 2009, it is time for us as a country to consider removing the universal service commitment that is currently only for telephony and replacing it with a universal service commitment for connectivity.
	I would be the first to say that that is a bold step. I have been working in this industry for 10 years. Only eight and half years ago, we sold the first ever broadband connection in this country. Only four years ago we introduced the framework to give us the most competitive market in the world. To introduce the suggestion of a universal service commitment today is a significant step, and one that will be welcomed by industry and users alike.
	The next-generation access question, raised by the noble Lord, Lord Luke, is a significant infrastructure question for the United Kingdom. We make a clear case in the document that there is good evidence that the market will provide significant investment for up to 60 per cent of the country, and perhaps more. Of the remaining 30 per cent, however, there will probably be a question of the case for public incentives. We make it clear that we will do the work on that and bring back our answers before the summer.
	On rights and content, I absolutely share the view of the noble Lord, Lord Clement-Jones, that the creative and content industries are a powerhouse sector in the British economy and one of which we should be rightly proud. We must find a way to find a platform for those industries to continue to innovate, be the envy of the world and thrive in the new world which we describe in the report, while giving them a legal framework.
	To describe the rights agency as a quango is both inaccurate and unhelpful. It is, as suggested, as co-regulatory industry grouping. We have four examples of that already in the communications sector, which work extremely effectively. We have, in the mobile telephone sector, ICSTIS, now PhonepayPlus, paid for by a small levy: 0.34 per cent of revenue of any participating company. It provides a safe framework for the development of the mobile telephony industry, giving it freedom to adapt with the changing circumstances of technology. In the advertising industry we have the BACC, a clearance and screening group, again paid for by a small, level, levy, to provide a point of gathering for the industry to share technology standards and applications that could help resolve the content and peer-to-peer filesharing questions.
	The legislative backdrop on infringement is necessary. We have listened long and hard to the content industries and believe that we have struck the right balance between providing a legislative backdrop while at the same time not trying to put in place in legislation what might be unworkable firm solutions.
	On the BBC, we are clear in the report that the BBC will be a mainstay of any future market. We are equally clear that it needs to continue to accelerate its approach to partnerships and engagement with the rest of the industry. However, we are, I hope, also clear that we wish to create a second large-scale public service provider. Indeed, there has been much discussion in the broadcasting industry, and two significant reports of substance from Ofcom, the latest only received last week, on this question.
	We have made a clear statement in the report that we accept those recommendations; that we commit to the creation of a second large-scale provider; and that, between now and the summer, we wish to do the work, the due diligence, on how to construct that and create an organisation that is both sustainable as well as conceptually desirable. That is a significant task of work. It is not an easy thing to do and must be done with due care and attention, not least because we are talking about the value for money questions of public assets. We will do that work, and I am confident that, when we have done so, we will end up with a recommendation that we can bring to this House and the other place to give us two large-scale UK content businesses of which we can all be proud.

Lord Fowler: My Lords, I have two quick questions. First, will the Minister confirm or deny the report in the Times this morning that:
	"Top executives from media and telephone companies will go to 10 Downing Street to hear about Digital Britain before the plans are presented to Parliament at lunchtime"?
	Did they do that? Of course, if they did, that would have been smack against the Ministerial Code. We all get into problems when rules are not observed.
	Secondly, following the important point of the noble Lord, Lord Clement-Jones, will the Minister explain what is meant when the Secretary of State says:
	"We will also explore how we can establish a sustainable public service organisation which offers scale and reach alongside the BBC, building on the strength of Channel 4"?
	"Public service organisation" sounds like much more than partnership, which is what the noble Lord, Lord Clement-Jones, was actually arguing for. It seems to imply some kind of merger for Channel 4. The Government and others have already floated ideas of Channel 4 coming together with either BBC Worldwide or Channel 5. Is not the essential problem there that BBC Worldwide hates the idea of the former and Channel 4 hates the idea of the latter? Both those options appear to have been torpedoed.
	As we are in a consultative period, and leaving aside the licence fee, can we take it that, in planning forward, no new public money will be available to help Channel 4? Is that the implication of what is being said? It is important that we are clear where the Government stand on this.

Lord Carter of Barnes: My Lords, on the noble Lord's first question, there was indeed a breakfast this morning in Downing Street. I assure the noble Lord that, much to the frustration and disappointment of the people at the breakfast, there was no prior disclosure of the report or discussion of its recommendations.

Lord Fowler: What did you talk about, then?

Lord Carter of Barnes: We exchanged pleasantries over pastries, my Lords, and had a broad and far-ranging discussion about the future of the communications industries. We touched on some of the broad themes that one would touch on in the introduction to any discussion on this industry, which the noble Lord will know as well as, if not better than, me. The noble Lord would have been pleased to see that we were assiduous in following what one participant described as the analogue parliamentary convention; namely, that these things should not be discussed before they are presented to the House, and rightly so. He can be assured on that question.
	On the substantive question around the second public service organisation, I divine a slight sense of frustration from the noble Lord, Lord Fowler, and other noble Lords about the wording in the document and a yearning desire for clarity. Believe you me, no one has that desire more than I. We have chosen the words carefully because, at this stage, we are right to. What do we know for certain? We know that Channel 4 exists today as a statutory corporation funded almost entirely by advertising revenues. We also know that, on any independent analysis, that business is facing significant short-term and medium-term challenges. We also know—the noble Lord, Lord Clement-Jones, made this point—that having competition to the BBC is desirable. That is a generally held view, which this Government endorse.
	Therefore, the question is how you evolve from where you are to something that has scale and earns its money, its profitability and its revenue from things other than just broadcast advertising, given what is happening to that market structurally and cyclically. To do that, there are a number of options, some of which involve other what might be described as publicly owned assets and some of which might involve a contribution from the private sector. In the report, we are clear that there is a case for the creation of a new second player in the market, which is a public-service organisation in terms of its remit. However, the way in which it would be constructed and its funding models is work that needs to be done between now and May and June. We are absolutely open to people's views on that. We have detailed analysis from Ofcom, although that is, by its nature, policy-based analysis rather than financial-based analysis. But when you are moving to the point of conclusion, the financial-based analysis is as important if not, in truth, more important. That is the next stage to which we are moving.

Lord Bragg: My Lords, I declare an interest as an employee of ITV and a freelancer of the BBC. Does the Minister agree with Ofcom's analysis that regional news on ITV will not be sustainable after 2011, even with the benefit of sharing facilities with the BBC, and that alternative arrangements will be needed to ensure plurality in regional news thereafter?

Lord Carter of Barnes: My Lords, I hope that the noble Lord, Lord Bragg, knows my views on this question because I have been clear in many places, including in this House. There is clear evidence that the challenges facing commercial-funded broadcasters are accelerating. That creates a number of issues and where, perhaps, we feel that most sharply is around regional news, which is why in the report we make it clear that when we look at this second public-service organisation, one of the parts of the remit that we would look to consider as part of its responsibility is a significant commitment to news, national news, local news and regional news. Between now and then, there are other things that we could look at and, as the noble Lord knows, we are doing so.

Baroness Howe of Idlicote: My Lords, will the Minister give more information about media literacy and content harmful to children, an issue that was raised by the noble Lord, Lord Clement-Jones? The Minister will remember that during the passage of the Communications Act 2003, many of your Lordships were keen to expand the role of Ofcom to take account of rather more than media literacy as far as what was going on on the internet was concerned? Has he ruled out any more effective legislation on this or is that one of the options? This is a very important subject, and children are far more adept at accessing this material than any parents are likely to be.

Lord Carter of Barnes: My Lords, if my children are anything to go by, the noble Baroness is right. On media literacy, this House was prescient. I remember the debates, and one could politely describe the provisions in the Communications Act as limited. It is clear in the report that, if there is to be this expansion of capability and this explosion of speed and distribution, and if we are going to establish a universal service commitment and these services are going to be available in a much less controllable way, you must have a corresponding commitment to looking at literacy and standards. We are specific that we wish Ofcom to come back with recommendations on whether we should legislate for that. My personal view, for what it is worth, is that I am not sure that that is a responsibility that sits most neatly with the industry regulator, but we can return to that in the final report.

Lord Low of Dalston: My Lords, I declare an interest as chairman of RNIB. I can assure the Minister that, on the fourth ambition on accessibility and inclusion, we will be very happy, indeed anxious, to work with the Government and the industry to help to deliver that ambition. The Minister may be aware that there is a particular problem of accessibility of digital audio broadcasting radio sets as regards the visual displays and read-outs of programme content information et cetera. It would be very helpful if the Government were willing to use their good offices with the industry to help us resolve those problems.

Lord Carter of Barnes: My Lords, I thank the noble Lord, Lord Low, for his comments. As I hope he knows, in previous lives this has been an issue close to my heart, particularly in relation to accessibility on television. I am aware of the question that he raises. We would very much welcome an opportunity to work with parties, including his own organisation, with expertise in this area. We would welcome their input.

Lord Inglewood: My Lords, the Minister has explained what I might describe as his bipolar vision for public service broadcasting. But is not the easy bit explaining the vision, and the difficult bit, bearing in mind that two of the four public service broadcasters in this country are private entities, putting that vision into place? Does the Minister have any suggestion on how it might be done?

Lord Carter of Barnes: My Lords, suggestions have been made by interested parties. Recently, the industry regulator put forward three options, or possibly four, depending on how one reads the document. A number of private sector parties have declared an interest in being part of a public/private partnership in creating a second entity. There have been—as I think the noble Lord, Lord Fowler, alludes to, although he puts it slightly strongly when he suggests who likes what—various options put forward by the two entities which might be called publicly owned. I hope we are saying clearly as the Government that, between now and the summer, we intend to design and devise a structure that we believe works; namely, one that reflects value for money for the taxpayer for publicly owned assets, which is sustainable, which has an ownership structure that we believe will allow it to thrive, and which has sources of income that will be sustainable in a fully digital age. We have said that we are open to declarations of interests from all parties and we begin that formal design process as of next week.

Lord Maxton: My Lords, I welcome this report, however interim it might be. It is both comprehensive and radical in its proposals. The Minister will not be surprised to know that I welcome in particular the commitment to broadband to all in the country. Does he agree that this must be the first priority? Internet services in entertainment, information and individual commercial operations carried out by individuals are essential to all if we are not to have a divide between the rich and the poor in this area. Does he further agree that the internet is just as important as motorways in providing the services that we need in this country, economically and culturally? Will he therefore make a commitment that we should have at least some public funding for this?

Lord Carter of Barnes: My Lords, I thank my noble friend for his constant enthusiastic support for this agenda. As he knows, I share his passion for it. Perhaps I may be allowed a brief reflection. I recall that when broadband services were first being sold in this country, the major player in the market took a public position saying that there would never be a market for broadband in Britain. Three years later, when the regulator decided to unbundle the local exchanges, the general view of the media was that it was an unnecessary piece of regulatory intervention in a perfectly functioning market. The evidence suggests that if you have a view, take a position and have a clear direction, the market will follow.
	The internet is a truly revolutionary network. I agree with my noble friend that providing inclusion and access for all has to be the policy of a Government who believe in inclusion, and this Government certainly do. He will not be at all surprised to hear that I can make no comment on guarantees of public funding, but he can rest assured that I have strong views on the question.

Lord Swinfen: My Lords, first, I am disappointed with the statement that the speed of broadband is aimed to be two megabits a second, particularly since, as I understand it, parts of Europe are offering broadband speeds of up to 16 megabits per second. What are the Government doing to try and speed things up? Secondly, what is being done to prevent the drop-off in speed the further from the exchange that the computer operating on broadband is? For those living in the countryside with long distances between their computer and the exchange, this can be quite a serious matter. Can the Minister also tell us whether there are plans to recable the country with fibre optics, which I understand are a lot faster than metal cables, and would therefore help the situation? In asking these questions, I should declare an interest as a director of a charity that uses IT to provide specialist medical advice to doctors all around the world.

Lord Carter of Barnes: My Lords, I turn first to the universal service commitment because this was what I would call a point of confusion in an earlier discussion. We have stated that we wish to establish a floor of provision, not a ceiling. It is already the case that in certain parts of Britain, rates of up to 50 megabits are available. The noble Lord should not take from what we are recommending any indication that we are trying to cap the market; far from it. We are trying to suggest that, as with the water supply, there should be a basic level of quality and that that basic level should be universally available. Why have we set it at the notional rate of 2 megabits? We have done so because in today's world, despite its limitations, two megabits is a rate at which one can get resilient data and video services. However, in no way, shape or form are we suggesting that it is the ceiling of our ambition, because it is not. They are quite separate things.
	On the noble Lord's point about capacity, which is largely a function of how networks interconnect in their design, we recognise absolutely that network capacity is an issue. It will be a central part of our analysis of next-generation networks because they are the way to resolve the issue; namely, to put into the middle or core of the network more capacity for the services he has described.
	British Telecom has announced that it is going to deploy some new fibre optic cables, and I am certain that the technology it will deploy for this will be of the new variety described by the noble Lord. We also say elsewhere in the report that we shall ask for an examination of the case for opening up access to cabling ducts and other ways of distributing the fibre optics so that it is not always necessary to dig holes in the ground; rather it can be done through access to the existing infrastructure, whether it be current telecoms infrastructure or that of alternative utilities.

Lord Howarth of Newport: My Lords, reverting to the question of media literacy, is my noble friend aware that his affirmation of the importance of media literacy today will be extremely welcome, as is the emphasis on that matter in the report? Does he agree that there is too much facile disparagement of media studies courses? While it may be the case that some media studies courses are not as good as ideally they would be, is it not absurd to suggest, given the power of the media in influencing the development of public opinion in our politics and given the ubiquity and power of digital media in our emerging culture, that people should not be educated in media literacy? Is he aware that 100 years ago, the innovation of English literature in academic studies was rather comparably disparaged, and is not the situation today equal to that? Will my noble friend continue to do what he can to encourage his colleagues to promote good media education?

Lord Carter of Barnes: My Lords, as the Minister for broadcasting and communications, I share my noble friend's view that it is the highest calling. I remember the slight reluctance in my parents' household when I gave up a career in the law to pursue one in the media. I only managed to persuade them that it was a good decision when I finally gained entry to this House. However, I certainly share his view about the quality of the calling.

Lord Dubs: My Lords, I welcome my noble friend's Statement, and in particular his support for Britain's creative industries. Given the difficulties facing the commercial public broadcasting sector, can he suggest ways in which investment in the sector can be encouraged?

Lord Carter of Barnes: My Lords, that is one of the trickiest questions. Although it was said at a private breakfast meeting, I think that I am allowed to quote the Director-General of the BBC, who this morning described this as one of the tricky tensions of the new world. In this country we rightly take the view that the sector merits and benefits from public subsidy. That public subsidy is provided in the main by the licence fee, but there are other sources. In the report we ask the question—noble Lords may criticise it as an open question, but I have never felt that asking open questions is a bad thing; I was always taught that they were a good thing—as to whether we should identify alternative funding streams. Alternative funding mechanisms for quality content are available in other countries, and we need to find answers to this question.

Lord Alli: My Lords, will the Minister accept the deep concerns that some of us have about the creation of a second public service broadcasting organisation, particularly, if that is required, to be funded by the transfer of assets from the BBC?

Baroness Thornton: Do be quick, my Lords; we have reached 20 minutes.

Lord Alli: My Lords, if I am on my feet, I will take the time that I have, if the House wishes to listen to me.
	Channel 4 was supposed to be that second public service broadcaster and it has received hundreds of millions of pounds to become such an organisation. Does the noble Lord recognise that he will have a tough argument in this House to persuade many of us that more resources should be taken away from the success of the BBC to be given to a new organisation whose mission he cannot define and whose structures he has yet to put in place? It will be a tough job to get that through this House, and I wish him the best.

Lord Carter of Barnes: My Lords, if I am allowed to say so, few noble Lords are as renowned in the creative industry as the noble Lord who has just asked a question. He does not need me to tell him, therefore, that when you are trying to create something new, at times you are exploratory. Being exploratory in a creative process is difficult because you have to leave options open. I am well aware of the strong views on this question, not just in this House but in many places, but I would reiterate the position that the Government have clearly stated today: based on the evidence and the analysis we have seen, there is a case for looking again at what a new public service organisation, including a recast remit for Channel 4, would look like for the digital age. There are very real and difficult questions to be asked about how it would be structured and funded, and we will welcome the contribution of the noble Lord and those of all others.

Inequality
	 — 
	Debate

Moved By Baroness O'Neill of Bengarve
	To call attention to the impact of choice on the level of inequality; and to move for Papers.

Baroness O'Neill of Bengarve: My Lords, about a year ago, I was talking with a midwife about the safety of maternity services and I asked her what she thought about the proposed increase of choice in maternity services. She answered that she supposed that it would be all right, "provided the mothers choose in the right way". Her answer is amusing but it also hits a nail on the head: choices have consequences and, in maternity care, poor choices can endanger mothers and their babies. More generally, choices in public services have systematic effects on equalities and inequalities.
	Yet we can see high enthusiasm in both political parties for introducing greater choice in public services, and the public endorse that. Many of the more established arguments for greater choice have stressed the supply side. The complaint has been that monopoly providers fail service users, be they patients, parents, pupils or others. The hope has been that choice by service users will empower them, incentivise all providers to do better and sanction the worst providers. Ideally, on this argument, everyone gains except the inadequate providers—and that is all right.
	However, these are not the only effects of increasing choice. The more obvious effects are on choosers, not on the chosen—on the public, not on providers. Choices will differ and the subsequent experience and opportunities for those who choose variously will also differ. A child who gives up science early will, of course, not become a distinguished engineer and will not contribute to the innovations that the noble Lord, Lord Broers, stressed in the previous debate. Someone who chooses to smoke will increase their risk of illness and earlier death. These very obvious features of choice suggest that we should expect choice in public services to lead to varied inequalities.
	We therefore have to decide which choices matter and should be protected and which equalities matter and should be supported. Inevitably, protecting some kinds of choice will produce inequalities. If individuals are free to choose to work long hours or to pursue the fabled work/life balance, then working hours, earnings and leisure are likely to differ between those who choose differently. Some inequalities will be judged fair because they reflect fair processes and differing choices. In others, we judge equality as more important than choice. For example, we do not allow individuals to choose not to pay the same tax as others in like circumstances.
	As we stand on the threshold of new and integrated legislation on equality, we need to aim for a coherent combination of liberties and equalities. In its December 2008 report, the Government Equalities Office stated that the forthcoming Bill will,
	"address the disadvantage that individuals experience because of their gender, race, disability, age, sexual orientation, religion or belief".
	Read at speed, this can sound reassuring. It sounds like a commitment to strengthen anti-discrimination, which both protects certain choices and secures specific equalities, above all equality of treatment. Certainly strengthening and integrating anti-discrimination legislation is one central aim of the proposed Bill.
	Anti-discrimination legislation seeks to prevent discrimination on irrelevant grounds. However, it also requires discrimination on relevant grounds. Anti-discrimination legislation, for example, requires employers to discriminate on the basis of relevant skills and experience, both in making job offers and in promoting; it requires universities to discriminate among applicants on the basis of relevant preparation and competence.
	However, a great deal of discussion around the Bill is not about prohibiting discrimination on irrelevant grounds but about achieving what is called a more representative social and ethnic composition within each line of employment or each profession, or among students or holders of public office. This is well documented in the numerous so-called fact sheets published by various government departments and other public bodies. Groups of employees, students or office holders would be seen as representative when their social composition—judged, one must admit, using sets of categories with considerable deficiencies, but I leave that problem aside—mirrors that of the larger society.
	The attraction of focusing on this statistical equality is presumably that it looks like a way of reconciling choice with equality provided that, as the midwife put it, the people choose the right way. But people do not. In a diverse population, choice leads to different outcomes for individuals and for groups. So a question that we shall face in debating the equality legislation is whether a quest for more representative cohorts of employees, students and office holders is compatible with prohibiting discrimination on irrelevant grounds. Is this very abstract statistical equality—equality in the social composition of groups—compatible with genuine commitment either to choice or to substantive equality for the individual members of those groups? The reality is that trying to secure a representative composition within each group neither respects choice nor furthers equality for individuals.
	Let us consider for a moment that overworked issue, choice of secondary school by parents. It is said that middle-class parents, being better placed to choose, will choose better schools and—a quite separate point—will be more likely to get what they choose if there is a scarcity. Let us suppose that a particular area has one good and one bad school. Public policy could prohibit choice and avoid the unrepresentative consequences of choice by random allocation of children to schools. As noble Lords will know, that has been proposed in certain places. This would ensure that the social and ethnic composition of each school is representative of the area that it serves. However, achieving this outcome would not in itself increase equality for children; just as many children as before would attend a bad or a good school.
	Even the supply-side argument is more promising, for, according to it, parental choice will put pressure on poor providers, so ensuring that in the long run fewer children attend a bad school. A quest for representative outcomes neither respects parental choice nor secures greater equality of schooling for individual children. A preoccupation with representative participation focuses on one very abstract equality at the expense not only of choice but of substantive equalities that matter to individuals.
	There are many telling cases where a quest for representative outcomes furthers neither choice nor equality for individuals. For example, secondary schools in England allow an unusually high degree of subject choice. This is, of course, likely to increase with the proposed proliferation of sixth-form qualifications. Those applying to universities and later for employment will have chosen different subjects; they have the choice. The cohorts of applicants for specific courses are not likely to be representative of the population at large. Diversity of culture, background and interests is quite understandably reflected in diversity of interests and ambitions and so in diversity of choices and, down the road, in diversity of fitness for and choice of specific types of courses and employment.
	I remember noting over many cohorts of students applying for admission in Cambridge that students from some minority ethnic backgrounds were particularly keen on professional or pre-professional degrees and, correspondingly, rather more reluctant to do any other degrees. One result was an unrepresentatively high number of students from these minorities in professional degrees, presumably to be reflected in the future composition of the relevant professions. Should we worry if some professions have an unrepresentatively high or low number of practitioners from certain backgrounds? Should we seek to correct for choice by preferential admissions—for example, by admitting non-minority students and students from other ethnic minorities on the basis of lower achievement—or should we respect choice and provide equal treatment for diverse applicants by continuing to select only on relevant criteria?
	Student choice and fair process—that is, equal treatment on the basis of relevant criteria—are vanishingly unlikely in themselves to produce representative cohorts of qualified students and professionals in each degree, university or profession. In a diverse society, fair treatment cannot produce representative outcomes.
	Another case in which choice has led to less representative results can be found in the study of languages in schools in England. Since the abolition of the GCSE modern language requirement in 2004, the proportion of pupils in maintained schools who take a modern language beyond age 14 has fallen. After four years, by 2008, the total number studying French at GCSE had declined by more than a third, from 318,000 to 203,000. This was not compensated for by a very modest numerical rise in some other languages.
	The decline has, of course, been uneven. There were 27 schools in England where no pupils took a GCSE in any modern language in 2007. Meanwhile, pupils in independent schools, whose parents presumably saw career and cultural advantages in speaking other languages in a globalising world, have chosen to study more languages for longer. This has altered the representation of pupils from maintained and independent schools on language degrees; it is likely to alter their representation in many lines of employment. So here, too, choice is going to lead to less representative results.
	So far, the Government's response has been to encourage language initiatives in primary schools and to promote languages, hoping to nudge, as we now say, the choices that pupils make. However, if we really want more representative outcomes, we would do better to reinstate the GCSE language requirement and teach languages better, rather than trying to nudge the choices that pupils make in the forlorn hope that they, like their mothers, will end up making the right choices. That, of course, would produce equal representation of all groups among those studying languages.
	It is worth asking whether representative participation is an important social aim for which we should be prepared to sacrifice both choice and other equalities. Perhaps the best case that can be made for it is that it matters for policy-makers who are looking at participation levels for some benefit or activity that is expected to be universal. Here population-level evidence is, I think, useful. For example, the United Nations Development Programme looks at the relative proportion of boys and girls in primary education in different regions. However, from the point of view of the little boy or girl who loses out, it does not really matter whether boys or girls are doing better in their region—they have lost out. Public health policy-makers also need to look at the social composition of those who do not receive immunisation. However, information about the unrepresentative composition of the group of children being immunised is, frankly, of little value to the children who lose out or to their parents. What matters to them is substantive equality of treatment.
	There are many other choices and equalities that could be used to illustrate these issues. I believe that my noble friend Lord Krebs will say rather more about some of the public health issues. The educational examples that I have mentioned suggest to me that there are many ways in which we can seek a coherent combination of choice and equality for individuals, but we cannot coherently aim to secure what is called a representative participation in all lines of activity without restricting either choice or equality for individuals, or both.
	I hope very much that the Minister will be able to reassure the House that the Government's aim in bringing forward the single equality Bill will be to eliminate discrimination on irrelevant grounds and correspondingly to require discrimination on relevant grounds rather than pursuing the will o' the wisp of securing representative equality, which is achieved either by restricting choice or by neglecting substantive equalities. I beg to move.

Lord Desai: My Lords, it is a formidable task to follow the noble Baroness, who has a distinguished career as a philosopher, when I am a mere economist. But since economists have sunk capital into the notion of choice, I thought that I had better speak in this debate. Before I go any further, let me say that a House of Lords that can hold two debates—one on climate change and one on the level of inequality—is a House of Lords worth preserving.
	The noble Baroness raised so many questions that I have a problem sorting myself out. She tried to say that choice per se in a diverse society may lead to inequality. The choice that mothers are likely to have may lead to problems because they may not make the right choice. She then said something very cogent, with which I agreed quite a lot, on the notion of representative uniformity. To go for a representative target using certain broad classifications of gender, race, or whatever, is not likely to be helpful in achieving the goal of equality which the Government have set themselves. Along the way, she made a number of other cogent points.
	With regard to the bare bones of Economics 100 notions of choice, given that the distribution of endowments may be, and often is, unequal, economists would argue that, given choice, each person can move to a better position than what the initial endowment gives them. Inequalities are not altered very much by that, if at all, but the level of individual satisfaction or utility is enhanced thereby. That is all that economists ever say. One of the questions about the notion of equality is the end-state that we want to achieve. By what measurable or at least comparable indicator would we judge whether we have achieved equality?
	What struck me about British society when I arrived here 44 years ago was the strong notion—partly due to the influence of the Second World War, a very egalitarian experience for a very unequal society—that uniformity is equality. In the field of education, which I know something about, a lot of debate around equality in the choice of subjects and schools is hampered by the fact that people do not discuss the prior condition that career paths are very narrow and very few. We all take it for granted that the only high road to advancement in life is GCSEs, A-levels, university and onwards. If that is the only path involved, certain comparisons are indicated. The first would be to question the narrowness of the path. Why should there be only this path?
	The noble Baroness gave an example, which I cannot recall exactly, about how a child will never become an engineer if he or she does not do mathematics at school. That would be astonishing to an American; in America there are other paths to becoming an engineer if you have not done maths at school. Why should children be locked in? In our search for equality, we have to examine whether the structures we have set up, which are an inheritance from the past, are too rigid.
	Very few universities and other higher education institutions give a choice. The whole debate about working-class children going to Oxford or Cambridge is, in my view, futile. The point is not that a working-class child should go to Cambridge, Oxford or the LSE but that he should go to where would suit him the best. That may not be Oxford or Cambridge; it may be a further education college, a higher education college or a polytechnic. It may even be that if a child went to Oxford or Cambridge, that child would be stunted because he would have been much better off going to Essex, Warwick or Southampton.
	We have to change our notion that there are right royal roads, and only a few of them, to advancement. We have to allow society to open up and create alternatives. The end-state should be that each person—each child—should achieve the maximum they can. Since that maximum is not achieved at the age of five, 11 or 18, we must constantly offer them choice across different facilities and types of education. We must do that even for mature students and late developers, because you never know when somebody might develop—it might even be at 80 or 90. We are talking not just about an individual's choice on given subjects. Society has first of all to ask whether the number of alternatives we offer is not too limited to begin with, thereby reinforcing inequalities.
	The noble Baroness made other cogent points on representative equality which I entirely accept. There is great debate today about reserving jobs in government or places in higher education institutions for people who are deprived by social origin. Again the question is: should you judge an individual by membership of a certain category—you cannot avoid being a woman or black, for example—or should you judge individuals qua individuals? It is often the case that one member of a community which is on average deprived may be less deprived than another member of a community which is on average better off. Therefore, we do not want to subject people to a community label. Most importantly, when women are assigned to communities—a woman can be described as a Muslim or a Hindu, for example —it may often lead to greater disadvantage than if one just treated the person as a person, because the Muslim or Hindu society in question may have its own forms of discrimination which we may want to overcome.
	The subject of our search for equality is the individual; it is not communities. We go by communities because they are rough indicators of where discrimination lies, but we have to remember that the subject is the individual and the end-state is how well the individual achieves the maximum potential that he or she can. The measuring of maximum potential may lead to problems, and involve categories such as happiness or income, but we have to be absolutely clear that in searching for equality, we do not restrict either the subject of our search or the end-state by which we define equality. In both, choice is crucial.

Lord Patten: My Lords, it is challenging to follow such a distinguished philosopher as the noble Baroness, Lady O'Neill, in her forensic examination of what choice means and does not mean, and no less challenging to follow an—albeit self-styled—"mere economist" such as the noble Lord, Lord Desai, in his economic views on an area where, as he said, the economic profession has sunk so much capital. I wish rather to approach this debate from my own personal beliefs, which underpin my political beliefs. I apologise for introducing politics into the debate. I hope that it will not be judged as the equivalent of spitting in church. I intend merely to clear my throat on the issue.
	I very much agree with the noble Baroness when she states in her press release from the British Academy—it is the first time that I have ever seen a press release from the British Academy; it was a treat to read it—that choice has become a mantra for all three political parties and it is widely assumed that more of it will reduce inequality. I am glad that she and her noble friends, such as the noble Lord, Lord Krebs, have chosen to put this contention under the microscope today, because it is critically important for us all to re-examine what seems to be settled at any one time, and periodically to test the mettle of accepted social wisdom. The noble Baroness has done that clearly today and I thank her for it.
	That said, I welcome the apparent consensus, for I am a true believer in the benefits of choice. Indeed, if I may be seriously outspoken, perhaps I may say that I am also a true believer in the benefits of competition and would like to see a piece of suitable statuary celebrating competition in Parliament Square outside. However, I said that I welcomed the "apparent" consensus on the benefits of choice—it seems unimaginable that there might have been such a consensus back in the mid-1970s—because the commitment to choice seems only skin deep among some political parties.
	Truer colours will be revealed to us all if the electorate—it is up to them—choose a Conservative Government at the next general election, which will have to be held very soon. I say to my noble friend on the Front Bench that, should there be a Conservative Government, the sound of cracking consensus will be as nothing compared with what comes afterwards in terms of the great explosions from the trades unions in the public services, whether in healthcare, social care or education. They have often just paid lip service, or been forced to pay lip service, to the ideas and rhetoric of choice that were laid on them by the once-reformist new Labour movement. We now see only the dying embers of that reformism—in the repetition of language, and only language, and all that talk of markets, competition and choice.
	Choice was adopted by the Labour Party for a while, but it used to be the preserve of the old enemy, the Tories. After the next election, to the great delight of the trade union leaders, the Tories may become the new enemy all over again. There will be a lot of early trouble, with demands for the abolition of performance tables, transparency, public information and all the rest, all under the protective and seductive cover of the motif "trust the professionals". I smell a lot of trouble coming for a new Government, who will be left holding this fast-vanishing consensus. Support so unwillingly coerced during the Labour years will simply crumble if the years turn Tory—but who is to say on that?
	I have looked with growing surprise at the Government's statements on equality, as summed up by something called the Government Equalities Office, particularly in relation to the forthcoming equality Bill. The Equalities Office states:
	"The Government is committed to creating a fair society with fair chances for everyone".
	Setting aside the perennial problem of the definition of "fair", I simply do not think that Governments can ever undertake to create this or that form of society. That is neither the matter nor the business of Governments. There also seems to be quite a bit of muddle in the thinking of the Equalities Office, which, with respect, must reflect ministerial thinking, because the Equalities Office is only the mouthpiece of Ministers. It says on its website—and I recommend noble Lords to spend a moment or two on the website, as much innocent fun can be had reading the words there:
	"For society to be fair people must have the chance to live their lives freely".
	I say "hear, hear" to that, because this freedom demands choice by individuals—not the so-called creation by government of some particular form of society in this or that particular shape, which was absolutely explicit in the preceding sentence.
	That is probably enough amateur textual criticism from me, except to award a blindingly obvious prize to the triumphant conclusion that:
	"Factors like family background, educational attainment, where you live, and the sort of job you have can influence your chances in life".
	Who could dispute that innocent assertion from those in the Equalities Office labouring on behalf of Ministers? Yet, in the end, the most powerful driver to help people—and I promise that this is the last time I shall quote the Equalities Office—to,
	"have the chance to live their lives freely",
	as the Equalities Office wants, is the freedom to choose.
	That brings me to my third and last point, in praise of choice—recognising that just as men and women are imperfect, so is choice imperfect in the way it plays out sometimes, as the noble Baroness said. Stating that is to recognise that absolute equality is not only impossible to achieve but probably undesirable because of the tiresome unfairnesses inherent in people's different physical and mental skills.
	Can the existence of choice be bad? Can the exercise of choice be bad? I do not think that the existence of choice can ever be bad but the exercise of choice can be, if it leads to personal or social evil and if the decision is to choose to do something that is wrong, not something that is right. Otherwise, it is my belief—it may be an emotional belief that is not well founded—that, at every turn, the more choice there is, the more rungs there are on the ladder to take one over many different pathways. I entirely agree with the noble Lord, Lord Desai, in his assertion that we should value all different pathways to all different institutions in further and higher education. If Governments—or Cross-Benchers, for that matter—try to limit choice, they attempt to fetter free will under the law. Limit choice and the free society is limited. The shackles must never be put on free will.
	I never like using that most overworked phrase, "the human right", which is fired from the hip of almost every relativist self-appointed legal panjandrum at will and, seemingly, just means what they last thought it meant the last time they thought about it. Everything from choice of friends through to the choice of schooling and healthcare, which are subjects central to this debate, are fundamental attributes of individuals. While the midwife cited by the noble Baroness, Lady O'Neill, was absolutely right that the right choice is imperative, choice has now opened up opportunities, however imperfectly, for hard-working families to choose where to live—no longer on the council estate nor in the tithe cottage—just as a century ago or so, little by little, the opportunities came for the poor to get a better and better education to get to the great universities.
	There have been some revolutionary changes in the past. Perhaps I may—daringly, in these straitened times—mention the financial services world as an example of the sudden freedoms post-big bang in the City of London in the late 1980s that allowed much more choice in who could enter that hitherto closed world, which had been pin-striped and totally male, and trade there. More choices were suddenly given by that self-generated explosion.
	Give them choice and even the most apparently disadvantaged will then have the opportunity to improve their life chances. Whether they are successful or not, I cannot say—but they should never be patronised or engineered. Hence my dislike of Governments shaping or creating some form of society. They should never be peered at as if they were rather interesting anthropological specimens. They should, rather, be given the choices that actually power life's chances.

Baroness Sharp of Guildford: My Lords, the title of this debate today referred to,
	"the impact of choice on the level of inequality".
	I thank the noble Baroness, Lady O'Neill, for bringing the subject to this House, as it is important and interesting, and for her very thought-provoking introduction to it. Equally, as a fairly simple economist, I interpreted the title in a somewhat different way. The three speeches that we have heard so far seem to have questioned to some extent what we mean by choice and inequality. How do we measure inequality?
	Confronted by this title, I turned to Isaiah Berlin's two concepts of liberty. I will read a quotation from his extended essay. He said:
	"The extent of a man's, or a people's, liberty to choose to live as he or they desire must be weighed against the claims of many other values, of which equality, or justice, or happiness, or security, or public order are perhaps the most obvious examples".
	Because my brief in this House is to speak on education, I was particularly interested in the issue of choice in education. I shall be picking up some of the remarks made by the noble Baroness, Lady O'Neill, in relation to equity in education. I also was interested in the health issue, which is in a sense another public service issue.
	The conclusion I take from Isaiah Berlin is that there are many trade-offs to be made in this world; you cannot have pure choice or pure equality; these are to some extent competing ends; and we have to take decisions as to how best to make choices, or, indeed, to decide between those competing ends.
	I also want to turn the question on its head to some extent and look at the issue of equality and choice—how far can you make choices if there is extreme inequality? I shall come back to that at the end of what I have to say.
	Let me start. I wanted to look at the whole issue of education. As the noble Lord, Lord Patten, noted, the British Academy press release said that there has been a consensus across all parties—more recently including my own—and that the pursuit of choice in education by offering a wider range of schools and a greater diversity of choice and allowing parents to choose and pupils to choose, will in itself improve performance in schools, which in turn would raise the game of all schools and offer a better quality of education to all. Thereby, since in many senses it is agreed that education is a key to equality, promote greater social mobility and greater equality.
	Of course, it has not worked out quite like that. First, for the market to work people need to be well informed. As we all know, some—the better educated and the more articulate—make it their business to be better informed than others. Good schools are over-subscribed and a rationing process has been introduced via admissions criteria. Again the better informed know how to work the admissions process. The Government step in to lay down a common set of rules and to try to redress the balance by appointing choice advisers to the less well informed. We are back to the midwife who says that as long as they make good choices—choices I would suggest—they are making the right choices. Economists describe this as market failure due to the asymmetries of information. Some are very much better informed than others.
	Secondly, the market works more slowly than theory would imply. It takes time for successful schools to expand while unsuccessful schools wither on the vine. Again, those left in the unsuccessful schools are those who, for one reason or another—information, transport or a life dominated by other issues such as ill-health or poverty—cannot easily switch their children to the more successful schools. Choice in this respect leads to greater, not less, segregation.
	Anecdotal impressions are confirmed by the evidence. A paper published in July 2007 by the IPPR summarised the evidence from five studies and found that although there seemed to be some correlation between school competition and pupil attainment, the causal link was not there. In other words, competition was not necessarily the driver of the improved performance. What did seem, however, to stand up was the link between social segregation and polarisation of results: schools full of high-attaining pupils further pulled up their results; schools full of low-attaining pupils went further down. Moreover, the shift towards independent governance, academies and foundation trusts was exacerbating this trend. Work by the Sutton Trust showed that of the top 200 comprehensives in England, 70 per cent were their own admissions authorities, compared to only 31 per cent across England as a whole. Within those schools only 5.8 per cent of pupils qualified for free school meals, compared with an average of 13.7 per cent in the areas that they represented. These findings were reinforced by a recent study from the London School of Economics. Its authors, Sandra McNally and Romesh Vaitilingam, sum up the conclusions as follows:
	"Taken together, these findings suggest that simply offering parents a wider choice of schools and forcing schools to compete does not seem a remedy for poor standards in education: such policies might also exacerbate inequalities".
	Much the same can be said of the introduction of the market in health, which has so far produced somewhat similar results. A joint investigation in 2007 by the Healthcare Commission and the Audit Commission found that those parts of the NHS that had adopted market style reforms most keenly did not perform significantly better than those slower to change. The NHS improved, thanks to record growth in spending backed by targets to reduce waiting times. These were,
	"substantially delivered without using the system reforms".
	Interestingly enough, one of the report's conclusions was that one of the drivers behind improving services was not so much patient choice itself but the fear of the impact of patient choice, which was effecting a change in attitude among providers. The same conclusion was picked up by the King's Fund, which suggested that some American studies had found that improvement in quality is driven not by patients actually switching providers but by the impact on hospital managers concerned about the public image of their organisation. The King's Fund briefing states:
	"The implication for the NHS is that choice may have an impact even if few patients actually use the information to switch hospitals in practice".
	It is too early for any evaluation of these choice effects on equity but the London choice pilots in the NHS indicated that there was no difference in the take-up of choice by socio-economic groups. On the other hand, each patient was supported by a "choice adviser" who provided individualised support, as has been suggested for disadvantaged families with regard to schools.
	I come back to the Isaiah Berlin quotation and the trade-offs between choice, equality and other values. As a Liberal Democrat, I hold liberty, and all that it stands for in terms of freedom to choose one's own destiny, very dear. However, I must recognise that adherence is not unlimited and that there are trade-offs to be made with other values. Evidence suggests—I have referred to that from education and health—that we cannot have total freedom of choice without exacerbating inequalities. I suggest that equality in itself has value. Britain is today a very unequal society experiencing its most unequal distribution of income since the mid-20th century. Social factors are linked to income and wealth factors. There is a good deal of evidence from the United States that those states that have greater equality in terms of the distribution of income also have not only lower morbidity rates—we see this in the 1980 Black report on the National Health Service—but lower rates of violence, hooliganism and anti-social behaviour. Those factors are all linked to inequalities in income. Distrust of others is also linked to inequality of income.
	Tawney says of inequality that,
	"opportunities depend not only on an open road"—
	I suppose today we would call an open road a level playing field but I much prefer "an open road"—
	"but upon an equal start".
	My thesis is that liberty, the freedom to choose and equality are not a zero sum game. The ability to make use of and enjoy opportunities in a democratic society will be enhanced, not curtailed, by a fairer distribution of income and wealth in our society.

Lord Krebs: My Lords, I thank my noble friend Lady O'Neill for introducing such an important topic for debate and declare an interest as a co-author of a report for the Nuffield Council on Bioethics on the ethics of public health. It is on health that I wish to focus my attention in the next few minutes.
	Let me start by giving the good news and the bad news. The good news is that people's health in this country has improved dramatically over the past century. A boy born today has a life expectancy of about 76 years; a boy born in 1901 had a life expectancy of a mere 45 years. This increase continues today. According to one estimate, expectancy of life is increasing at a rate equivalent to 12 minutes per hour, so even by sitting and listening to my speech, your life expectancy will increase by two minutes.
	Now for the bad news; there are still great inequalities in health in this country. The World Health Organisation figures shows that in Glasgow, a boy growing up in the deprived suburb of Calton can expect to live for only 54 years, which is a staggering 28 years less than a boy born just a few miles away in the affluent suburb of Lenzie. We would surely agree that this is unacceptable.
	Why has life expectancy increased, and why are there still such large inequalities? I am sure that noble Lords know the answer. Our life expectancy has increased in part because of vastly improved medical treatment once we are sick, and partly because of a wide range of public health measures to prevent us getting ill in the first place. These include vaccination against disease, improvements in our nutrition, the air we breathe, the water we drink, and the general conditions in which we live. The disparities in health that remain are also a result of many factors, but they are generally associated with deprivation, low social class, the certain kinds of employment, or lack of employment, living conditions and lifestyle.
	To take just one example of a disparity in risk, in 2005 in England, 29 per cent of manual workers smoked, compared with 19 per cent of those in non-manual groups. Since half of all smokers die prematurely, this difference among social classes—there are also big differences among ethnic groups—is a significant contributor to health inequalities.
	The political philosopher Ronald Dworkin wrote:
	"No government is legitimate that does not show equal concern and respect for the fate of all those citizens over whom it claims dominion".
	I hope that all noble Lords would agree with this sentiment. The Department of Health certainly does. I quote from its website—although I bear no responsibility for the poor English:
	"Health inequalities are unacceptable. They start early in life and persist not only into old age but subsequent generations. Tackling health inequalities is a top priority for this Government, and it is focused on narrowing the health gap between disadvantaged groups, communities and the rest of the country"—
	whatever that might mean—
	"and on improving health overall".
	How can the Government reduce health inequalities, particularly inequalities in the burden of chronic diseases that are now the major causes of premature death, such as heart disease, cancer, and type 2 diabetes?
	The particular challenge of these diseases is that they are so-called lifestyle diseases. Factors such as diet, exercise, smoking and excessive drinking contribute substantially to variation in risk. Any kind of intervention by the Government into people's lifestyle is almost certain to be branded as the nanny state at work. Here, the familiar trade-off—the noble Baroness, Lady Sharp, referred to it—is between, on the one hand, leaving each of us free to lead the life we wish and, on the other, the duty of the state to reduce inequalities and protect the most vulnerable in society.
	That brings me to choice. As has been said, all political parties favour policies to reduce inequalities in health that are based on information and choice. Choice is an attractive policy option, partly because it is the leitmotif of our consumer society and therefore fits with people's expectations and partly because it is not intrusive. "Give people the information and empower them to choose" sounds very plausible and acceptable.
	I argue that much of the choice that we are offered is illusory and, more importantly, that choice alone is most unlikely to succeed in reducing health inequalities. Why do I say that choice is illusory? Because many of the choices that we make, for instance, the kind of food we buy in the supermarket, or whether we cycle to work for the exercise, are constrained by the decisions of others; in these examples, retailers and urban planners.
	Their decisions shape and limit the choices and they are motivated by factors such as profit, other than improving our health and reducing inequalities. In fact, the very opposite is the case: those who construct and constrain our environment have conspired to create what the experts call an obesogenic environment, in which the easy choices lead to ill health, rather than good health.
	Even with the choices you have, how do you know which are the "right" ones. In his book, The Paradox of Choice, Barry Schwartz vividly describes the impossibility of choosing between the 230 different kinds of soup, 275 varieties of cereal and 15 varieties extra virgin olive oils in his local supermarket. There is even a further problem with choice. It is a fundamental feature of our nature that we prefer options that satisfy our short-term needs, rather than our long-term benefit. Psychologists refer to this as "failure to delay gratification", which we heard about this morning in the debate on climate change.
	Why do I say that choice will not reduce health inequalities? The problem with information and choice is that the money, the opportunities, the will, and the skill to respond to choice tend to be highest among those who are already doing well, and lowest among those most in need of help. A recent study in the Journal of Health Services Research & Policy makes the point. It states:
	"Better educated populations make greater use of information and are more likely to exercise choice in health care".
	So is a more interventionist stance necessary and justified? The Government's Foresight report on obesity not only documents the rapid rise incidence of obesity, and its huge social-class difference—for instance, the prevalence of obesity is 18 per cent among men in social class 1 and 28 per cent for men in class 5—but the report considers a wide range of policy options and concludes by saying that:
	"Our evidence shows that a substantial degree of intervention is required".
	Does the Minister agree with this conclusion? Does she accept that while exhorting people to eat healthily and exercise more, and putting nutrition labels on food, may have some benefit, it is not likely to succeed in reducing health inequalities resulting from obesity? If the Government are serious about achieving their objectives stated on the Department of Health website, they will have to be bolder and, perhaps, more interventionist. Choice may be the easy option, but it will not work on its own.
	I end on two points. Where the Government rely on information and choice, they must ensure, if necessary by regulating the groups and interests that shape our choices in the way that I have described, that it is easy for people to choose the options that will lead to better health—nudging in the terminology of Thaler and Sunstein. Secondly, if Government are to fully exercise their stewardship responsibilities in reducing health inequalities, they must be prepared to go beyond choice.
	The approach of successive Governments to tobacco is a possible model. A combination of education, legislation and taxation has reduced the overall prevalence of smoking from more than 75 per cent of the population to less than 25 per cent today, although substantial inequalities remain, as I have said. The current Health Bill proposes new and welcome measures to further restrict the ways in which the tobacco industry is able market and sell cigarettes. If these measures are implemented, they will help to reduce inequalities in health.
	Let us hope that in the future, Governments will have the courage to tackle other health inequalities with equal determination.

The Lord Bishop of Chester: My Lords, I shall attempt a synthesis between the position of the noble Lord, Lord Patten, and that of the noble Lord, Lord Krebs. I am not sure how successful I shall be.
	Choice is potentially a good thing. Freedom, which choice seeks to express, is in some sense central to authentic human experience. It has certainly been part of the rhetoric and inspiration of the British national character and history. One thinks of Churchill's most inspiring rhetoric, contrasting freedom and tyranny—although the 20th century also demonstrated how freedom that exists simply out of its own strength and for its own purpose can become its own tyranny. One thinks of Sartre's epithet: "Hell is other people".
	The problem can be put this way. Any society or system that bases itself on freedom and choice without restraint, moderation and, to use an in-vogue word, regulation tends to produce an exaggerated outcome in winners and losers. In society as a whole, the losers can easily slip into becoming an underclass, where poverty and underachievement become endemic, as is the case in terms of health in parts of Glasgow and elsewhere. A symptom of this is a larger-than-average prison population.
	If the United States comes immediately to mind, there is a great deal about British history since 1979 that exhibits similar strains and imbalances, with an inexorably rising prison population here, too, and ingrained poverty among certain sections of our people. With that goes the well rehearsed problem of underachievement in the lower educational reaches of our schools. There is more than one way in which a society can sleepwalk into segregation. Arguably, we see the same dynamic at work today in the former Soviet Union, especially in Russia, with the extraordinary, and extraordinarily rapid, emergence of a super-rich elite. I cannot believe that this will be to the long-term benefit of Russian society.
	The question that I have puzzled over as I have thought about the topic for this debate is how a society can promote freedom and choice yet avoid the worst outcomes which produce exaggerated winners and endemic entrenched losers. In the year when we especially recall Charles Darwin, I shall try to illustrate briefly how choice emerges in the process of evolution. Scientists tell us that the universe came into existence about 13 billion years ago. For most of those billions of years, no life had yet emerged, but then there was no death either. Death comes as a consequence of the emergence of life. As evolution advanced and plant life came about, so came the possibility of diseases or the deformation of plants, with one organism impairing another. Further up the evolutionary tree came animals, which had a greater sense of choice and meaning—the ability to move around their environment—but then one animal could prey on another. The arrival of human beings also brought the ability to relate to eternal, transcendent values of truth, beauty, justice, love and so forth. However, along with that came the emergence of moral evil. Nature may be red in tooth and claw but in the animal world you do not get the equivalent of a Hitler or a Pol Pot.
	The point is that, as the freedom of creation develops, choice emerges, and it brings both the flowering of true humanity and a corresponding threat. So it is that choice and freedom tend to generate winners and losers, and a corresponding increase in inequality. To some extent, that will be inevitable in any society, but I think that society needs to seek to set certain limits to it in one way or another.
	This, I believe, has been a major part of the story of Britain, especially over the past 30 years. I do not argue that this has been altogether bad. Indeed, I think that there have been many positive outcomes during this period in terms of choice, opportunity and the benefits of economic liberalism. In relation to the last, there has also been an underlying instability, which is being cruelly exposed in the current banking crisis.
	With freedom must always come responsibility and an obligation towards the common good of wider society. Archbishop William Temple put it this way:
	"Concentration on acts of choice as the proper locus of freedom ... is a blunder. Freedom is not absence of determination; it is spiritual determination ... by what is intrinsically good".
	This is an ideal, of course, and in practice both individuals and society as a whole will fall short, but all the more reason for seeking active commitments to moderate or avoid the inequalities that too narrow a focus on choice will tend to generate. These need to be the commitments of government, individuals and the intermediate institutions in society alike.
	I follow others who have contributed to the debate by reflecting on what this might imply in the area where choice has been given so much prominence in recent decades: education. There has often been official puzzlement at the stubbornly high and socially unacceptable underachievement in our secondary schools, particularly by those in the lowest quartile of achievement, despite 20 years of being given a priority by government in both planning and the allocation of funds. The built environment of schools has seen a significant and welcome transformation, but that has not been matched by improvements in the achievement of those at the lower end of the scale in particular.
	Choice operates in the state system by reinforcing the differences between good and bad schools, or those that are perceived by parents to be good and bad. The academy programme has been part of the response, by rebuilding or replacing schools in underperforming areas with new schools endowed, at least in theory, with new freedoms. In many ways I regard the academy programme as an imaginative response to the educational challenges in more deprived areas, but one consequence has been further to disadvantage non-academies in neighbouring catchment areas, which are often themselves struggling somewhat. I expect that the academy programme will achieve its aims only when all or most schools are organised along those lines and other policies are in place to support the weakest schools and the poorest areas to take account of their intrinsic tendency to fall down the scale where the natural forces of parental choice are permitted to operate—and they will tend to operate whatever restrictions are placed on them.
	Of course, although this is rarely introduced into our debates, choice operates in another way between schools, to benefit some and disadvantage others. I refer to the choice of around 8 per cent of the wealthiest parents to send their children to private schools. These schools are usually academically selective, which unavoidably makes them socially selective, and the resources spent per pupil are typically higher than in the state sector. We ought to ask much more searching questions about how society can ameliorate those inequalities that so distort school-age education in our country. I say that as a parent who has sent a child with special needs to private school, because it is naturally the instinct of every parent to do the best for their child. I pay tribute to the excellence exhibited in many private schools and to the academy programme, which is an attempt to emulate them.
	The educational playing field needs undergirding policies that aim at least to promote levelling out, including a clear plan to match in state schools in this country the spending per pupil in private schools. Interestingly, higher education arguably presents a better picture. Students attend by choice and the Government have a good policy to increase and widen participation. The universities, unlike state schools, are independent institutions, so to achieve their aims the Government have operated through quite a sophisticated mechanism of regulation for home undergraduates—HEFCE, which is, theoretically at least, at arm's length from government—allocating funded places with some care and moving to support weaker institutions, despite their formal and, indeed, actual independence.
	I hear suggestions that new elements of choice may soon be injected into this sector by lifting the fee cap and perhaps by deregulating a proportion of home undergraduate places. Those who have the responsibility for these matters should think long and hard before moving in those directions, with due attention to the law of unintended consequences.
	In summary, choice and equality of outcome are inevitably in tension, but it is possible for a society both to respect choice and to develop ways of operating policies and social norms that seem to ameliorate the worst outcomes of inequality.

Lord Northbourne: My Lords, I thank my noble for friend for introducing this thoughtful debate and I congratulate my noble friends on the Cross Benches on such a good turnout.
	I shall look at the impact of choice and equality in the context of families. The tension between choice and equality is strong for various reasons, but particularly because it tends to be the parents who make the choices and the children who suffer from the inequalities that may arise. In saying that, I should add that there are 11 million children in this country, which is a substantial constituency. My noble friend has already spoken about how parents can entrench inequality by their choice of schools. I shall not follow that train of thought because I want to draw attention to another kind of parental choice, which arguably is even more important. It concerns the kind and quality of family life that parents choose to give their child.
	In today's society, the most important influences on children's chances in life are likely to be the quality of the family life that they enjoy and their relationship with their parents. We all know that young children need to have a secure attachment to a mother or surrogate mother whom they love. They need to feel safe, to be talked to, to be played with, to be stimulated and to be encouraged. The family support that children get before entering school is a major factor in their ability to integrate into school and to learn. Even in full-time schooling, children spend less than 30 per cent of their waking time in school. That means that 70 per cent of their waking time is spent with or under the influence of their family, so it is their life in their family that should give them the ability and self-confidence to integrate into school, understand what is going on, participate and learn. It should develop their self-confidence and age-appropriate social and emotional skills. Crucially, it should give them the ability and confidence to communicate verbally before they get to school and with adults and other children once they arrive. Without those skills, children arrive in school already at a disadvantage.
	A government-sponsored report by Charles Desforges confirms everything that I am saying. In 2005, he demonstrated that a substantial body of research shows the important links between the quality of children's family life and their success in school and therefore, arguably, in later life. Luckily, most parents, most of the time, give their children the family life that they need, but some do not. We need to explore the ways and the reasons why some children are not getting the parental support and family life that they need.
	Some of the reasons are beyond the control of parents. We all know about poor mental health, drug and alcohol abuse, domestic violence, poor housing, single parenthood and poverty. It must be a priority for any responsible Government to do their best to address these matters and help parents and families that have these problems and to do so even more effectively than the Government are at present achieving.
	However, when all those factors have been discounted, there remain many cases where parental choice may be a major contributory factor in denying a child the quality of family life that he or she needs. I shall give three examples: teenage pregnancy; a father walking away from his young child in order to form another family; and a mother deciding to have several children by different fathers and then bringing them up in a household where her partner is not the father of any of them. Those are three examples of the enormous number of ways in which parents can affect their child's future and ability to achieve equality of outcomes.
	All children are different, but all young children need long-term, consistent love and security. In this country today, the only effective social mechanism that we have for delivering this love and security is the family, whether it is a birth family, an adoptive family or a foster family. That gives a great deal of importance to parental choice.
	For that reason, parental choice can be reconciled with our ambitions for equality if that choice is guided and empowered by parental responsibility and by shared norms of social expectation that are widely understood and accepted. Here, we are talking about nudging. People cannot be compelled by law to love their child or to bring it up in a particular way, but they can be nudged. It is fortunate that today it is recognised that choice, including parental choice, can often be influenced by the establishment of normative expectations, linked to recognition of and support for those who conform to them. As has already been mentioned, smoking and seat belts are examples where the policy of nudge has been effective.
	The principal tools that we have to influence behaviour in relation to choices about family life are information and motivation. Parental choices must be based on good information. Frank Field recently suggested a highway code for parents, which is rather a good idea. It is not a law; it is a highway code, a guide. Such a document would set out the obligations that our society intends that it should be parents' responsibility to fulfil, in return for the many benefits that they get from the state, such as free education and healthcare. Such a highway code would have to be based on the needs of the child as confirmed by research and there would need to be a measure of consensus.
	However, information is not enough. Motivation is needed. This is the crux of what I have to say this afternoon. We must find ways to persuade more parents and families to make the choices that will be best for their child. In particular, our society today needs more parental commitment; parents must be committed to the well-being of the child and, where possible, to each other. Parental commitment does not have to be in the form of marriage, but for those who reject marriage we must develop some other way for parents formally to make a genuine long-term commitment to their child.
	There are many other things that the Government could do to motivate parents and to promote commitment to family life. I give just two examples. Changes to the tax and benefit system could encourage parents to live together and to make a long-term commitment to each other. Today, in some cases, there are financial incentives for parents to live apart. Another important change could be in housing policy, to make affordable accommodation available to young couples, so that they can begin to build a home together as soon as their first child is born. Today, they may have to wait for years to get a home—even a mobile home would be better than that.
	We should now make it clear what our society expects from parents as a minimum return for the support that the state gives them. We should recognise, celebrate and promote long-term commitment by parents and families to their children and one another. Only by doing so can we hope to guide parental choices about family life towards those choices that will ensure more equal opportunities for all the nation's children, including the most disadvantaged.

Lord Harries of Pentregarth: My Lords, like other noble Lords, I am grateful to the noble Baroness, Lady O'Neill, for introducing a debate that raises such fundamental issues of both philosophy and policy. I will begin by approaching the subject from an historical and philosophical perspective.
	The movers behind the French Revolution of 1789 believed that liberté, égalité and fraternité went together and that, if you achieved one, the others would quickly follow after. They thought that, if only the old feudal legal inequalities were done away with and people were left free to live their own lives, equality would come about and from this would flow fraternity and the true human community. The old order kept people in their place and severely limited their choice. With choice opened up, it was assumed that everyone could prosper equally. In fact, as we know, this has happened only to a very limited extent. Opening up choice for everyone has led to inequalities of many different kinds, most obviously in the division between rich and poor and so starkly in the health and mortality figures that the noble Lord, Lord Krebs, brought before us.
	The result is that in our time there has often been an assumption that the values of choice and equality are opposed to each other and there has been a sharp polarisation between those advocating policies for the one or the other. That has been reflected to some extent in this debate. However, it is a grave mistake to think that these values are mutually incompatible rather than complementary. It is not always realised that a market economy depends on the value of equality as well as on freedom of choice, for, in stressing choice, we are stressing the fact that every individual has dignity and worth and is free in principle to exercise that choice.
	Ronald Dworkin has put it as follows:
	"Under the special condition that people differ only in preferences for goods and activities, the market is more egalitarian than any alternative or comparable generality".
	The qualifying clause is, however, crucial. People not only differ in their preferences but differ hugely in the opportunities open to them to take advantage of those preferences, so although it is important not to see choice and equality as mutually conflicting values, we must always bear in mind the context in which people make their choices.
	RH Tawney has already been mentioned once in this debate. Another of my favourite quotations from him is:
	"Equality of opportunity is fictitious without equality in the circumstances under which men have to develop and exercise their capacities".
	This means that any Government must properly be concerned not only to enlarge people's choices but to ensure that they can take advantage of them.
	I find a very obvious example of this in my own life. There are now umpteen TV channels to choose from, as well as the opportunity to download, to play CDs, to record, to play back and so on. In our sitting room, there are three remote control devices with umpteen buttons on them. I am genuinely totally flummoxed in a way that my grandchildren are not. To take advantage of the myriad choices now open to me, I have to be re-educated; I have to sit at their feet and learn how to operate this new technology. This is why the idea of computers in schools is such a sound idea. Most children now grow up able to take advantage of much of this new internet technology. That this should continue to be so is, I know, common ground between all the major political parties.
	What about education more generally and health and social care? In recent decades, there has been not only inequality but growing inequality in these areas. The noble Lord, Lord Krebs, drew our attention to the stark figures of two neighbouring districts in Glasgow. The figures that I am aware of show that, two decades ago, the difference in life expectancy between those in Glasgow and those in the south of England was about five years. More recently, that difference has grown to more than nine years. So we are talking not only about inequality but about growing inequality.
	John Rawls, one of the most influential of the 20th-century philosophers, argued that all citizens should have equality of basic liberties, such as the right to vote, access to the law and freedom of speech. When it came to economic matters, he argued that freedom to compete in the market outweighed equality, because this made for a more efficient system that could benefit all. In short, a degree of inequality was acceptable provided that the poor benefited. A society is just only if its worst-off are better off than they would be under any alternative arrangement.
	Rawls justified this view on the basis that, if we all had to choose a society from scratch with no idea as to whether we would be badly off or well off in it—in other words, leaving aside all our present interests and position in society—we would be bound to choose his idea of a just society, for this would be the only one in which everyone could benefit wherever they were born in it. However, the acid test of this is of course whether the worst-off are in fact benefiting, or benefiting enough; according to Rawls's view, which seems pretty compelling, our present arrangements, which allow for some inequality, are only justified if they are. So, in terms of this debate, the pressing question is whether the choice that has opened up in recent years really has a beneficial effect on the most disadvantaged in our society. What studies have the Government done to show that the most disadvantaged are really benefiting, not just through what the Government have done in a good way through interventionist policies, but through what they have done to open up choice?
	In contrast to previous Labour Governments, for new Labour equality has not been a mantra. Just the contrary: the very idea has been viewed with some disdain. This has had some justification. Policies on children, for example, which are so important to the noble Lord, Lord Northbourne, have been devised to enable the most disadvantaged to make a better start in life through such things as Sure Start, and to begin to share in what our society has to offer. This makes sense. Of course, there is no point in an ideology of equality that fails to take into account the differing gifts and vocations that society needs and people have to offer.
	Setting light to flat, abstract notions of equality is one thing; growing inequalities in almost every sphere of our life are another. Growing inequalities undermine our society in a number of ways. They offend people's sense of fair play. They foster resentment. They undermine people's sense of worth and dignity. They sap the very spirit, for it tempts people to say, "Well, why bother, if it takes me several lifetimes to earn what a financier will get as a Christmas bonus?".
	Most people will recognise that some degree of inequality is inevitable and probably healthy, but gross and growing inequalities, particularly in health and mortality, are mightily offensive. Therefore, any Government who are concerned for the totality of society and the common good of all their people will be concerned not simply to enlarge choice but to ensure that people are in a position to take advantage of the choices that are open to them. The conclusion emphasised so eloquently by the noble Lord, Lord Krebs, is inescapable: some interventionist policies are absolutely necessary.

Baroness Afshar: My Lords, I thank my noble friend Lady O'Neill for introducing the debate and I thank all the contributors. I raise the point that many of us do not have choices. The assumption that everybody can exercise choice is problematic. We are limited not only by class and opportunity, as has been stated, but in particular by race and gender, which open limited pathways for many of us.
	Speaking as a woman, I argue that, if you are born as a woman, the expectations of women as a gender and the identities ascribed to women narrow pathways right through. In the education process, the options open to women were until recently limited. When they are opened, women face an inherently gendered labour market. In order to be successful, we must do the man hours at the desk and work as if we were a man.
	The most successful men usually have a woman in the background who does the domestic work. However, because the domestic work is not paid and because it is not visible, it is not seen as work. Some might say that, when women come to the labour market, they are always assessed as men. If they are young, they will seem inferior bearers of labour, not because their work is any different but because they potentially would be mothers and carers and would potentially be held back at home. Therefore, they are always placed at the bottom of the opportunity ladder, as if they were for ever mothers and carers. If women choose, as many have, to compete on an equal par, they are thought to be failing their families—they are not obeying the family laws of caring and they are not being good to their children, so they are failing in the other part of their ascribed identities.
	If we are talking about choice, we need to qualify that by acknowledging the presence of prejudices and the existence of identities that prescribe particular activities and confine a whole category of population—it so happens that it is the majority of the population—to a very narrow pathway in the job market. Women are seen as suitable for doing the equivalent of domestic work in the labour market because they are women. In that labour market, they are also confined to the bottom ranks. If we look at the general position of cooks, cleaners, hairdressers or beauticians, we see that the top ranks are always occupied by men.
	If we begin opening pathways—I absolutely agree with the noble Lord, Lord Desai, that we must have a variety of pathways—one of the first things that we need to do is to recognise the life responsibilities of people and to valorise them. We need application forms for jobs that demand of everyone their familial skills; that is, how good a negotiator they are within the family context or how well they operate within the household. To some extent, we have been successful: Unilever has introduced such an application form because its human resources person is a woman with children who works part-time. If we realise that it is doable, there will be open pathways for the majority of people in this country to access equal opportunities.
	Having a different faith or colour is often debilitating. My noble friend Lady O'Neill asked why many minorities train for professions. As a teacher, I rely entirely on the research of my students. I have a student who has just finished her PhD on the plight of Ismaili women in Iran. Ismailis are a minority Muslim community in Iran. They look exactly like all other Iranians—they are the same colour and the same shape—but they have a different creed. My student found that the only way forward for minority Ismaili women was to be trained in professions in which there were shortages and in which it was necessary to employ you whatever your creed, so that entry is easier. I suggest that this is very much the experience of many minorities in this country.
	There is also a difficulty when minorities are asked to choose in terms of their loyalty. As a Muslim, I remember after 9/11 suddenly being asked to choose between being Muslim and being British. I must say that I am very grateful to the House of Lords for not imposing such a choice, but I am sure that, if I were to stand as a candidate for election in my locality, my faith would be much more important than anything else and I would be discriminated against.
	I declare an interest as a commissioner on the Women's National Commission. For a long time I have campaigned for quotas and for allowing people to come forward on the basis of their gender. It seems to me that, at least as a means of opening doors, it is the only way. I can cite the example of politics in that the largest tranche of women entering the other place was the result of all-women quotas for selection.
	I differ from the noble Lord, Lord Desai, on the question of quotas. I have another student who is working with the gram panchayats in India where quotas for woman have been imposed. She has found that, in the poorest and worst tribal areas where women are uneducated and have to work very hard, when women are elected as local representatives, the policies become very different and start to benefit women. Water is used for drinking rather than for planting. It is essential that we do this.
	Unless we have a differentiated understanding of equality and unless we qualify choice, we are going to get stuck. That is because the best choice for women would be to become quasi-men, to come into the labour market and to succeed there—I assure noble Lords that we would—but not to produce babies. The most deskilling activity that any woman can engage in is having children. If a woman does what is right and pulls out of the labour market to look after her children, she finds that she cannot get back in because she is not allowed to. She goes back on to the bottom rung.

Lord Northbourne: My Lords, I have never said that it is the duty of women to look after children.

Baroness Afshar: My Lords, of course it is not their duty, but it is generally women who do so. We have to be careful about defining choice. It is essential that in our differentiation of choice we think about celebrating difference. We can contribute different things at different times during our lives, so let us please open the pathways.

Lord Dahrendorf: My Lords, I confess that it took me a while to figure out exactly what this debate was about, but now it is clear that my noble friend Lady O'Neill has begun a debate on the good society, no less. What we call "choice" and "difference" are in fact freedom and equality, and it is on the whole issue of freedom and equality that I want to say a few words.
	It was Aristotle who said that entire equals will not build a state. Human beings are not equal. Important statements have been made about differences in endowment, equality and entitlement. In my view, these differences are one of the foundations of progress, and inequality arises from the fact that within human societies, they are put into a rank order. I shall take an extreme case. If we ever come to live in a future society in which computer literacy is the main virtue, I might join the noble and right reverend Lord, Lord Harries, as a member of the new underclass; that is, those who are not engaged in that trade. We live in a society that is sometimes called a meritocracy—and I wish to see a debate in your Lordships' House about this interesting concept, on which quite different views are held—but it is educational attainment that plays an important part in creating the inequalities of this world. It creates a rank order among the differences which exist between human beings.
	I see nothing wrong with that and would go a step further. Many years ago I wrote an essay called Inequality, hope, and progress, in which I argued that because there are inequalities, including inequalities of rank, there are reasons for people to hope to advance themselves rather than just continue with what they have inherited. It is through this desire to advance oneself, through choices, that we create what one might call progress.
	After today's debate, I would add choice to the list of the advantages of inequality. One of the great things about inequality is that it makes choice possible and plausible. But there is one crucial question: what conditions must be met for inequality to become acceptable and bearable? Here I list four important items. They are not the only ones—one could undoubtedly have eight, or perhaps reduce the four—but they seem to me to be of crucial importance.
	The first item has been one of the subjects of our debate: that no one must be prevented from taking part in the universe of opportunity. That is easier said than done. Those of us who have been involved in debates about equality of opportunity know that the words sound fine but that in practice it is an enormous task to create anything resembling equality of opportunity. I do not believe that it is fictitious, but it requires a great deal of social action to make citizenship real; to make every person in our society a full citizen, with access to the opportunities which this society has to offer.
	The second point has also been a subject in this debate: that in choosing the pathways individuals prefer towards their satisfaction—or, if you wish, happiness, although I do not believe that happiness is either a political or social category—it must be effort and achievement rather than privilege and what my noble friend Lady Afshar called identity which determine where they are going. This is where the issue of discrimination comes in in an important way.
	The third point about a society in which inequality is fruitful for the whole, and therefore bearable, was made by the noble Lord, Lord Desai, and it cannot be emphasised too strongly. The different pathways available for people in our world must be interconnected and permeable; they must not be rigid paths from which you cannot escape once you have taken the first step along them. If I may put it this way, closed shops are almost as bad as caste barriers. That is to say that a system in which there is a rigid allocation once initial decisions have been taken, and which is impossible or difficult to change, is wrong. I therefore agree with my noble friend Lady O'Neill and the noble Lord, Lord Desai, about representative groups. The notion that there has to be proportional representation of all groups in all areas of life is absurd. I do not want to live in a society in which such rigidities prevail. It is crucial that those who have chosen a certain path can change it and decide at a certain point in their life to take a different way. That, incidentally, is also a comment on some of the major needs in educational policy, but I shall stick to the principles I mentioned.
	The fourth point is topical and, again, might require a separate debate. Inequality is bearable as long as those at the top, in positions of leadership, are not totally remote from the rest. In my view, this is one of the key problems we are faced with today. For reasons which one can speculate about, those in positions of leadership—especially in banking and business but in many other areas as well—have somehow lost touch with those for whom they are responsible, which is a necessary condition of a society which lives with its inequalities.
	Beyond those conditions, I believe that it is highly desirable to have a society of differentiation and inequality, where a hundred flowers bloom and people are free to choose the ones they like best.

Baroness Thomas of Walliswood: My Lords, I thank most sincerely the noble Baroness, Lady O'Neill of Bengarve, for introducing this debate. I am grateful to her for giving me a health warning about the single equality Bill, with which I will no doubt be engaged later this year or whenever it appears. She made some extremely interesting and sophisticated statements which, I confess, I shall need to read before I am certain that I follow every word. I am sure that they will become extremely valuable to us all.
	Years ago, when I first joined the Liberal Party, I went to a tiny little conference, somewhere in the west country—Devon, I think—where I asked a young MP, "What is the essence of the Liberal Party?" I shall not embarrass him by identifying him—he is now a Member of this House and comes in quite frequently. When I asked him what was the heart of Liberalism, he said, "A Liberal society would be one in which every person had the maximum chance of freedom, consistent with an equal freedom available to every other person in that society". He concluded, "The Liberal Party exists to bring such a society into effect". Well, we have not succeeded yet, but you never know.
	I confess to finding it difficult to get a handle on this subject and knowing where to begin, and to recognise the potential conflict between choice and equality of outcome. With a good deal of thought, and through listening to what other people have said during the day, I think that I have got, more or less, into the right ball park.
	The Government have been overeager, some would suggest, to insist that choice is automatically beneficial for citizens. The example that everyone has used—I am afraid that I will use it as well—is choice of school. Experience teaches those of us who have served as governors, for example, that this exercise of choice benefits in particular those parents who have the self-confidence to work the system on behalf of their own children. That has become more the case since the diversity of school provision has increased.
	Meanwhile, it seems that not all students are given the same opportunities. Otherwise, why are so many young people emerging from 11 years or so of full-time education without any useful qualifications? The recent report from the Public Accounts Committee in another place has drawn attention to the underperformance of students leaving school at 16 without any worthwhile exam results to show potential employers. The sadness of it all is that young people who leave school without any of the qualifications required for life and to work in a modern society have been denied a chance to make the most of their lives, as the noble Lord, Lord Desai, vigorously pointed out.
	Who makes the choices which limit young people's futures? Is it the teachers, or the parents who do not know how to use the system, or the government targets which seem to dominate the lives of teachers? Education provides a classic demonstration that choice does not always favour those who need the services most. In theory, everybody has the same chance to see that their child gets to the school of their choice, but some parents are better educated or richer, or more confident, adept and persistent in using the system. It is therefore often the school, and not the family or the pupil, that has the real choice. Meanwhile, the children who come from poor or chaotic families, or whose parents either will not or cannot appreciate the benefits of a good education, may not get the encouragement they need to do well at school.
	Yet failure at school has too many dire consequences to allow us to tolerate this. It would be marvellous if the teaching, discipline and human relationships in every school were aimed at ensuring the maximum benefit to each pupil from their 11 years. There might then be a more rational hope for greater equality of outcome than we seem to be able to achieve at present.
	Taking a different aspect of the same syndrome, I wonder how many women have the chance to follow the same rewarding career path as men can expect. I am grateful to the noble Baroness, Lady Afshar, for her heartfelt but expert words on this matter, a matter which I have pursued during most of my life in politics. One would suppose that women and men are of equal worth as employees, but now the press is full of stories of the disproportionate risks faced by women in the workforce as a result of recession. It is said that recession could set back the cause of equal treatment of women in the workplace; that employers will use the recession to avoid taking on women who may become pregnant; and that the share of women in the workforce will decline as men move into "women's work", because traditional "men's work" will employ less of the workforce. That of course ignores the fact that many—almost all—of the problems of recession were caused by men rather than women, who are poorly represented in the banking and financial sector.
	I shall not make a long speech—we have heard a number of excellent speeches which have completed their time—save to say that we need to think carefully about the different strengths and weaknesses of people who have to work the choice system. If you or your parents went to university, if you have lived a middle-class life and if you have always governed your own life, you may then be able to fight for your children in the hospital, school or wherever they need to be fought for; but there are many people, particularly women, who do not have those advantages. It is not a question of money. I have a very poor daughter, but she is very well educated and has fought successfully to get her children to the right schools—they are not paying schools but the right public schools. It is a question not of money but of that innate ability to fight, to contest, to get in contact with other people, to argue with them, to wear them down and to do the things that you need to do in this very difficult and choice-driven atmosphere to get the outcome that you want for you and yours.

Baroness Morris of Bolton: My Lords, given that I shall be touching on education in my speech, I declare an interest as a governor of Bolton School.
	I, too, am most grateful to the noble Baroness, Lady O'Neill, for introducing this fascinating topic. In conversation the other day, I mentioned to someone that I was responding to this debate from my Benches, to which the retort came back, "That's the sort of title I used to give my pupils as a punishment". However, this has been a pure pleasure, with remarkable contributions from fine minds and many different but equal ways of tackling the subject.
	Given the breadth of the debate, I shall not be able to comment on all noble Lords' speeches, which is a pity because they all deserve comment. However, I would just like to say to the noble Lord, Lord Northbourne, that although I agree with him that some parents will make some choices that impact adversely on their children, I believe that the answer lies not in reducing choice but by ensuring that parents can make informed choices, be able to exercise those choices and have a proper range of support to help them. I recommend the excellent whole family intervention programme of my party.
	To my noble friend Lord Patten—you keep spitting in church, because I agree with you. I, too, am a true believer in choice because, as the right reverend Prelate the Bishop of Chester said, "choice is good". I thank the noble Lord, Lord Krebs, for an extra two minutes. Perhaps I could use them in my speech.
	This subject has two important but very different arguments. The first is that choice in public services exacerbates inequality. The second is that there is inequality in the exercise of choice by the public. It is important to draw a distinction between those positions. The first argument contends that, since choice exists in many elements of public services, thanks to the efforts of many on my Benches and the more progressive minds on the Benches opposite, and since inequality not only persists but shows signs of increasing, choice must be, at best, an ineffective method of ending inequality and, at worst, a contributory factor in worsening it. Choice has been introduced; inequality has grown—post hoc ergo propter hoc, for the classicists among you; or, as in my case, aficionados of "The West Wing". It will not surprise noble Lords to hear that I do not agree with that argument.
	The second proposition is that there is an inequality in the exercise of choice by the public, since it is mainly the better educated, more privileged middle classes who are able to avail themselves of the choices offered; the less well off are not, and inequality therefore results. That argument certainly has some merit and helps to explain the fallacy of the first.
	Before continuing, it is worth considering what we mean by "inequality". I think that a better word would be "unfairness", because inequality exists in many spheres of life, often without negative consequences, because people possess different characters, different strengths and weaknesses and have different preferences. So we have to be careful. Denying someone the benefits of their own hard work and achievement simply because it would result in inequality is undoubtedly unfair. Instead, we must focus our efforts on ensuring that everyone has equality of opportunity and that the ability for self-advancement is not restricted to a privileged few but spread as widely as possible.
	One of the most effective political messages that I remember from the last Conservative Government was a poster in John Major's own handwriting of three words: "Opportunity for all". That simple objective is what drives many of us in politics, of whatever party, and is at the heart of what we are discussing today. If what we seek is equality of opportunity, we must return to the second proposition that I set out earlier—the fact that too many people from poorer backgrounds do not have the opportunity to exercise the choices available to the better off. It is true in a very literal sense that the better off can afford private healthcare, private education and better housing. Some would argue vehemently of the unfairness of that, but they would, I hope, accept that the distinction is at least clear.
	More troubling to us all should be the less transparent unfairness in public services funded by the taxpayer. There are the health inequalities mentioned by the noble Lord, Lord Krebs, with shocking disparity and life expectancies between different parts of the country. It has been reported that when travelling east on the Jubilee Line from Westminster, each stop correlates to approximately one year's reduction in life expectancy in the surrounding area. We all know of horror stories about the postcode lottery in the NHS, of treatments being available in one street and not in the next.
	In education, the disparity in the quality of state schools is open for all to see in the league tables, but is no less shocking for that. In fact, it is more shocking when we look at the differences in provision within relatively small areas. For example, in London the highest performing borough at GCSE level is Richmond upon Thames, where 65 per cent of pupils gained five GCSEs, including English and maths. That is a massive 31 percentage points above the lowest performing borough, Greenwich, where just 34 per cent of pupils achieved that level. The value parents put on this evidence is clear to see in the premium attached to house prices inside the catchment area of good schools.
	That brings us back to the central argument that people with greater means and resources are able to take advantage of choices, which those from less privileged backgrounds cannot. We could respond by saying that choice works against fairness, so let us stop pursuing choice. That would be a grave error. Instead, surely, we should strive to bring that choice to those who cannot currently make use of it. Opportunity for all, however hard, as the noble Lord, Lord Dahrendorf, said, that task may be.
	I put the matter simply: the problem is not that choice creates inequality, but that choice is not equally available. The solution is not to end choice, but to extend it. I will continue with the example of schools. As many noble Lords have mentioned, there has been a gradual introduction of choice into the system. Parents can express a preference for the school they wish their child to go to, but the problem is one of supply. There are simply not enough good schools to go around. As John Prescott once tellingly remarked, the problem with good schools is that,
	"everyone wants to go there".—[Official Report, Commons, 25/1/06; col. 1422.]
	He may well see it as a problem, but, to the more optimistic of us, it represents hope. It demonstrates the underlying demand that exists from parents for the opportunity to choose the best services available for their children. That is not just a pushy, middle-class concept, but something that parents from all backgrounds share. The problem is not that too many people want to make the right choice, but that in the current system not all will be able to. The lack of supply has led to the increasingly painful debate on schools admissions policies. The fact that it is now acceptable to allocate places by lottery is a damning indictment of the state system. It confirms completely the lack of any meaningful choice that parents are able to exercise. Local authorities and schools, bound up, as they are, by restrictive guidance from the DCSF, are forced to conjure even more excruciating procedures to ration fairly the limited number of places available.
	Fairness does not mean giving everyone an equal chance of a bad service, but meeting the demand from parents and patients for greater choice. When two choices exist, competitive pressure will provide the incentive for a much better service across the board. There will not be equality of outcomes. Some schools will be better than others and some hospitals more efficient. The overall level of service will improve and there will be a vital escape route for those who are badly served. Equality of opportunity and fairness is not harmed by choice; it requires it.

Baroness Thornton: My Lords, I congratulate the noble Baroness on securing this debate. She has brought her customary intellectual rigour to this issue. It has been a thought-provoking debate and, unsurprisingly, each contribution has explored a different aspect of the issue, and each has been as penetrating as the previous one.
	It is daunting to answer a debate that includes contributions from the former head of my university, the London School of Economics, the noble Lord, Lord Dahrendorf, and the noble Lord who attempted to teach me economics there, my noble friend Lord Desai. Failures since I graduated are all my own, including this speech.
	I might summarise the theme of the debate as "choice or equality", which if posed in that way suggests that one precludes the other. In general it may be argued—the noble Baroness has, indeed, argued this—that greater choice does not of itself lead inevitably to greater equality.
	In the 24 hours that I had to prepare for this debate—I am sure that noble Lords will fully understand why my noble friend the Leader of the House is unable to be here—I found an interview—thank goodness for Google—that the noble Baroness gave in March 2002, presumably when she was in the process of giving her distinguished Reith lectures, to which I listened with great pleasure. The interview stated:
	"She is dismissive of campaigning bodies such as the Equal Opportunities Commission and the Commission for Racial Equality".
	It went on to say:
	"I think there's a great deal of muddy thinking in that direction. When people talk about equality, I would ask: equality of what? It's not helpful to judge equality by some sort of statistical profile".
	The noble Baroness has expanded that point of view with intellectual rigour. I think we can all agree that greater equality means more than the movement in a statistical profile. Greater equality will mean more and improved opportunities. It means lifting people's ambitions and is fundamentally about creating a shared sense of fairness. It is not about equality by statistics but the core philosophy behind the forthcoming equality Bill. It makes for a more peaceful society which is more at ease with itself and a stronger economy which includes the talents of all.
	Before we get to the heart of this debate, to set it in context, it is worth casting our minds back to the days "BC", before choice, to the days of monopoly provision. We should cast our minds back to the days when the council decided what colour your front door was painted and the design of your kitchen, and when patients had little choice over where they went for surgery. Even in 1998, this meant that 185,000 people were waiting more than nine months for elective surgery. In my mother's case, for example, there was a distinct lack of maternity choice involved at my birth in 1952 as compared to the maternity choices that were available to me in 1986. We should cast our minds back to the days when parents had little control over which school their children attended despite around 30 per cent of children leaving primary school in 1998 without a basic mastery of English and maths.
	As the former general-secretary of the Fabian Society, with its rich tradition of discussion over 150 years of evolving socialist and progressive politics, I am very familiar with these debates, some of which were mentioned by my noble friend Lord Desai, by the noble Baroness, Lady Sharp, in her references to Isaiah Berlin and Tawney, and in the remarks of the noble and right reverend Lord, Lord Harries of Pentregarth.
	The absence of choice meant an absence of incentive for providers to improve. We have come a very long way and much progress has been made. My right honourable friend the Prime Minister said in a lecture to the Social Market Foundation when he was Chancellor:
	"As Amartya Sen has famously argued, equality rooted in an equal respect and concern for our citizens demands not just greater equality of resources but also equal capability to function and develop their potential. Such capability can be developed through a new approach to public services—one that maximises responsiveness and flexibility to provide services that empower the individual to flourish and one that engages individuals themselves to be active partners in achieving these results.
	Because achieving equality of opportunity is a fundamental goal in a progressive society, I believe each person has an equal entitlement not just to high standards of service, but to as equal a chance as another of developing themselves and their potential to the fullest. Because people begin from different starting places, in different circumstances and with different needs, public services need to be personalised in terms of their resources and range of provision".
	Choice of school was mentioned by several noble Lords, including the noble Baronesses, Lady Thomas and Lady Morris. Parents have the right to apply to any school of their choice. We are committed to ensuring that all schools are good schools and that all children should have the best start in life. The Schools Admissions Code aims to ensure a fair and straightforward system that promotes equity and fair access so that no parent is disadvantaged because of their circumstances or background. Therefore, I disagree with the noble Baroness, Lady Morris. We know that this is not perfect, but we are on the right path.
	In the health context, the impact of choice can be expected to have positive implications for inequality. Providing all people with a choice of where they seek healthcare, anywhere in England, means that we have created a system in which not only the rich are able to access the highest quality of health services.
	In some circumstances, if left in an unfettered state, more choice may well, as noble Lords have suggested, provide more opportunities for some to benefit but at the expense of others. However, in many cases, choice can actually be a driver of improvements in services and reductions in inequality.
	I understand that choices can be restricted by a lack of knowledge; low aspirations stemming, for example, from family economic circumstances; traditional expectations; and by young people not fulfilling their potential. However, exercising choice that is informed and supported, as described by several noble Lords, can lead to improved equality and provide opportunities for people who would otherwise have been excluded from choosing a particular path in life.
	Also there are those for whom the mere fact of having choice, and therefore independence, is fundamental to a reduction of inequality. Having informed choice has resulted in many thousands of people with a disability who may otherwise have been excluded from the workplace leading fulfilling working lives. The Government's current specialist disability employment provision helps disabled people with complex barriers to enter and stay in employment.
	We are taking steps to ensure that choices are informed and supported and to reduce inequality, for instance, in the field of education. Choices in education are not just issues for school-age children and students; they continue throughout life. As technology develops to expand these choices about how to learn, the Government will seek to ensure that the digital divide—the gap between those comfortable with technology and able to access it and those excluded from it—is reduced. I hope that some noble Lords may benefit from that. We want everyone to have the opportunity to make the best of the new digital opportunities and of achieving their potential.
	The solution in education is to move even further towards personalised learning and away from a one-size-fits-all, monolithic approach. That was expressed much more eloquently and expounded on by the right reverend Prelate. From 2010, each child in secondary school will have a personal tutor, someone who knows them well, checks progress and responds quickly if any problems emerge. Children are being supported to make informed choices. The Government are supporting pupils and students to make real and appropriate choices about their education. We are facilitating informed choices, helping to break down stereotypes, contributing to a reduction in inequality and offering real opportunities.
	Greater and informed choice to reduce inequality is also at the heart of the reforms in the health service. This Government have taken on professional interests in the health service throughout our time in government. The Government of the noble Lord, Lord Patten, signally failed to challenge those interests on behalf of patients, and I do not feel that we need to take lessons from the noble Lord on this.
	Choice in this context means meeting the growing patient demand for more choice and control over their healthcare, giving more incentives to the providers of healthcare to ensure that they are more responsive to patients' demands, delivering more equitable access to healthcare by giving choice to all patients rather than the well informed who are able to navigate a difficult system, reducing inequalities between patients through better tailoring of services and involving patients in decisions about their healthcare.
	The noble Lord, Lord Krebs, pointed to the contradictions in personal choice and public health objectives. We agree—I have always agreed with the noble Lord—about the need for more rigour. He rightly pointed to tobacco as a very good model. On 10 November, the Government launched our campaign on healthy lives, Change4Life, a strategy in which we aim to promote children's health and healthier food choices, build physical activity into our lives, support health at work, provide incentives more widely to promote health and provide effective treatment and support to people who are overweight and obese.
	Research has shown over and over again that there is overwhelming support for having choice in healthcare. In 2005, the London Patient Choice Project found strong support for choice from lower income groups, at 80 per cent, and the unemployed, at 78 per cent. When offered choice, they used it. Research has shown that the ability of people to access information and/or travel to receive treatment may affect how much they will benefit from choice. The challenge for us is to ensure that all people have the information and support that they need to make the most of the choices available to them. We believe that providing these groups with high-quality support and information to ensure equal access is of paramount importance, and we will ensure that choice does not exacerbate inequalities.
	By extending the right to apply for flexible working, for example—an issue championed by the noble Baroness, Lady Morris, in her Private Member's Bill last week, which I am sure we will debate further when the Equality Bill is published—the Government are determined to support people in having real choice, not just whether or not they work, but the opportunity to work, earn an income and balance the other commitments in their lives, offering choice and reducing inequality.
	The noble Baroness, Lady Afshar, described many of the challenges and prejudices that women face in the labour market, and I agree with her that a 22 per cent gender pay gap is shaming; there is absolutely no question about that. However, there is hope for all of us if the noble Lord, Lord Patten, is reading the Government's equal opportunities website. The noble Lord, Lord Krebs, quoted Dworkin, as did the noble and right reverend Lord, Lord Harries. I did wonder whether I should do so. What I had not appreciated was that this philosophy lies behind the NHS website. I am not sure whether I draw comfort from this.
	I apologise if I cannot cover all the points noble Lords raised. I will read this immensely meaty debate and seek to write to them if I do not tackle specific issues. The noble Baroness, Lady O'Neill, raised the issues of representation and equality. Unequal representation signifies an unequal society. We should look to representation—for example, in this Chamber and in Parliament generally—to ensure that all voices are heard. Although we cannot of course legislate for a representative society, my belief is that we should offer greater choice to make that more likely.
	The noble Baroness also raised the issue about too many children leaving school without useful qualifications. I have a long answer to that, but I will make one point. This year, 129,000 more young people achieved five good GCSE grades, including in English and maths—the foundation of equal opportunities for post-16s—more than in 1997. Gaps in educational attainment are narrowing, not widening.
	The noble Lord, Lord Northbourne, as ever, brings to the House the fundamental issues about the quality of children's lives and the importance of supporting parents in their choices and helping them. However, these are challenges, as the noble Lord recognises, and any Government would face challenges in this area. He is right, however, to say that information and motivation are the key factors. The noble Baroness, Lady Morris, and I agree with him that there is a limit to what Governments can do.
	The noble Lord, Lord Dahrendorf, was unlike the rest of us who quoted philosophers and thinkers. I took out my pen and made notes when he was speaking. My noble friend joined me in nodding almost all the way through the noble Lord's speech regarding the conditions that must be met to make inequality bearable. I shall not repeat them, but I shall treasure them, use them and feed back into the system those parts which might address these issues.
	The noble Baroness, Lady Thomas, raised the issue of women suffering unequally in the recession. We recognise that, because women are employed in different sectors disproportionately, particularly in retail and financial services, we do, indeed, have to look carefully at the effect of the recession specifically on women. My right honourable friend Harriet Harman has said:
	"Everybody is affected by the recession, but women are affected differently, so we need to focus on that".—[Official Report, Commons, 27/1/09; col. 161.]
	I hope that I have gone a little way towards illustrating that the Government are determined to offer informed and supported choice across a wide spectrum of services. We are focused on reaching the groups that have often been excluded or have been passive recipients of the one-size-fits-all monolithic provision of the past. In taking this approach, the Government are giving people the opportunity to make real, appropriate and informed choices. They are reducing inequality and giving people greater control over their lives.

Baroness O'Neill of Bengarve: My Lords, it has been an immensely interesting debate and I have learnt from every single speech. I think that in many ways we have come a long way, as was said by more than one noble Lord, in that debates about choice and equality have lost some of the stereotypical quality that they used to have when some people led the cheering for choice and others led it for equality. Now, we look at a broad array of possible choices and equalities, but I think there has been widespread acknowledgement around the House that you cannot have it all. You can have some choices and some equalities but at the expense of not having other choices and having inequalities.
	If there is a remaining area where I think that we may not be, as it were, on a level playing field, or a road going forward—various metaphors have been used—then it is the question of where we think public services that embed choice procedures will lead. We can be optimistic, as I think the Minister was by suggesting that we are moving on to that sunlit part of the playing field in which a greater degree of equality is achieved by the process of choice. That was, after all, the very question that I wished to raise. When do procedures of choice lead to greater inequalities and when do they not? If we accept that representational inequality within lines of work or training and so on are signifiers of an unfair society, then I think that we have a lot of delving to do.
	The Minister suggested that we need to go for more informed choice and more guided choice, although I think that "supported" is a more elegant word than "guided". I believe that informed choice will take us a certain way but, where choices are of a very high complexity, there is a certain gestural and unsatisfactory character to pretending that we can make them all fully informed. I believe that that applies particularly strongly in the healthcare area. Then again, it may be that some forms of support and guidance are really ways of crimping choice.
	Therefore, these questions remain open. Many have been addressed in wonderful ways and I thank all noble Lords who have taken part in the debate. I beg leave to withdraw the Motion.
	Motion withdrawn.

Merchant Shipping and Fishing Vessels (Port Waste Reception Facilities) (Amendment) Regulations 2009

Copy of the Order
	2nd Report from JCSI

Motion to Approve

Moved By Lord Adonis
	That the draft regulations laid before the House on 4 December 2008 be approved.
	Relevant Document: 2nd Report from the Joint Committee on Statutory Instruments.

Lord Adonis: My Lords, first, let me set these regulations in context: they concern the protection of the marine environment from ship-generated waste. Ships must be able to rely on being able to discharge their waste at reception facilities available in ports. These facilities must be easy to use and cost-effective so as to deter operators from disposing of their wastes at sea.
	Recognising this, the United Kingdom has had legislation in place for many years to put this principle into effect. After the UK had put its legislation in place, a proposal for European Community legislation was initiated. The UK played an active role in the development of this measure and the outcome was Directive 2000/59/EC on port waste reception facilities. The directive placed a responsibility on ports to provide adequate facilities for the disposal of waste and a responsibility on ship operators to deliver that waste rather than dispose of it at sea. The ship-generated wastes which fall under this directive are oily water, garbage and sewage. This directive was transposed in the UK by the Merchant Shipping and Fishing Vessels (Port Waste Reception Facilities) Regulations 2003. Article 16 states that the implementation of the directive in respect of sewage would be suspended until 12 months after the entry into force of Annex IV to the International Convention for the Prevention of Pollution by Ships currently known as MARPOL. This annex is now in force, so we can implement the remaining part of the directive, which are the regulations I am moving today.
	These regulations also transpose EC Directive 2007/71 which amends the notification form which ships' masters are required to fill in and send to the harbour authority before they enter the port indicating what quantities of which types of waste they are planning to deliver to the port. Although the transposition date for this directive is June 2009, we have taken the decision to transpose it early as it will bring welcome clarity for the industry on the provisions for disposal of sewage at sea.
	The regulations will come into force 14 days after the day on which they are made. This will allow some time for the industry to consider the published guidance. The industry has already been extensively consulted and will be fully aware of the new regime. These regulations amend the 2003 regulations, and the amendments include adding sewage in the definition of ship-generated waste. Sewage is defined as: drainage and other wastes from any form of toilets or urinals; drainage from medical premises via wash basins, wash tubs and scuppers located in such premises; drainage from spaces containing living animals; and other waste waters when mixed with any drainage referred to previously.
	The regulations also include amendments relating to requiring ships to deliver their sewage to port waste reception facilities. The amendment will oblige ports to ensure the availability of some facility for the reception of ship-generated sewage, although this may be as straightforward as providing the contact details for a contractor. As I mentioned earlier, the regulations also amend the notification form in Schedule 2 to the 2003 regulations to include sewage. They take account of the consultation exercises which we have carried out, as well as discussions with the European Commission and other member states. My department conducted a full public consultation exercise in 2005 and a further exercise in 2008. I commend these regulations to the House.

Lord Hanningfield: My Lords, I thank the Minister, for bringing these regulations before the House today. There is much to support in the earlier measures within them relating to oily water and garbage. Efforts to clear up the environment and methods to ensure that the environment stays clean are naturally to be welcomed, and we on these Benches welcome them very much. We continue to support them, particularly the provisions within the 2000 regulations.
	My comments today will not therefore be in the nature of opposition—indeed, there is very little to oppose. I will instead invite the Minister to answer one or two questions on the consequences of these regulations. I hope that he can answer them and in so doing provide reassurances that I know the industry might want. The Minister might have suggested part of this in his introduction, but will he provide greater context to the Government's decision vis-à-vis the timing of this instrument? Why has it been introduced at this stage? He did say a bit about that, but as the notes point out, these provisions were contained within the original regulations in 2000, and they amend the 2003 regulations. Nine years seems an awfully long time to wait for them to come into force. Perhaps the Government have been kind to industry, or given operators extra time to ensure that they have established the appropriate sewage reception facilities. Has the industry enjoyed a period of grace? Perhaps the Minister might further explain that.
	The Chamber of Shipping's response to the consultation on these regulations suggests not. A survey of its members revealed that:
	"Very few have any shore based reception facilities nor had they any plans to install suitable size tanks ashore".
	I would like to understand a little more about why this is the case. Will the Minister provide some context on this? What is the reason for this?
	I also invite the Minister to outline to the House what sort of research the Government have conducted to assess the preparedness of the industry for the enforcement of these regulations? What has that research revealed? Do the Government agree with the Chamber of Shipping's consultation submission? For example, what proportion of UK ports have facilities to process sewage? Which ports are they, and, equally importantly, which ports do not have appropriate facilities in place? If the Chamber of Shipping is right and a significant number of ports do not have the facilities in place, there will almost certainly be a number that will fail to comply with the regulations. Many others will incur significant costs in establishing the necessary facilities, especially now they are running against the clock. What type of penalty regime will the Government enforce for ports that do not have the facilities in place because they cannot afford them or because they do not establish the facilities in time for other reasons? Will the Minister provide more detail on how the Government expect to penalise offenders, at what rate and how they will enforce these regulations?
	I raise these points because all the evidence from the consultations is that the industry is in a desperate position. Freight rates for containers shipped from Asia to Europe have, I am informed, fallen to virtually zero, and the industry faces sustained pressure from foreign competition. I am concerned about what effect this measure may have on the industry's ability to compete. Will the Minister reassure the House that other countries are also adopting these regulations and that our industry will not be hit hard by overzealous application of the regulations or by overpenalisation? Now is not the time to hinder the industry, but to support it. My final question will dwell a little longer on the penalty regime. What does the Minister expect the policing of these regulations to cost and how will they work in practice?
	I do not want to detain the House any longer. We do not oppose these regulations, but we have concerns about their implementation, their practical application and the devil contained in the detail. I hope the Minister will reassure me and the industry in his response.

Lord Addington: My Lords, reading this order through, the only question is why this was not done a while ago. Not discharging sewage at sea seems rather hard to oppose. However, are there ports that are incapable of taking this on? This is the point raised by the noble Lord, Lord Hanningfield, and it deserves some consideration. There is usually a way of transferring even the most foul and noxious substances to places where pumping facilities are available. Is that what is going to happen? Is the rest of Europe more prepared than us, or as prepared as we are? I do not think there is a major question about disadvantaging most shipping, because it is local and this is a Europe-wide order, but it would be interesting to know the state of preparedness. Are the Government reasonably satisfied that with reasonable adaptations most ports can comply with these regulations? The principle is solid, so is there a way round the practical problems?

Lord Adonis: My Lords, I am grateful to both noble Lords for their broadly positive responses. The noble Lord, Lord Hanningfield, is concerned about burdens on the industry and asked whether, in the time of economic stringency that we face at the moment, it is unreasonable to expect ports to build sewage reception facilities and whether our industry would be at a disadvantage compared to those of our partner countries within Europe.
	I should stress to the House that the regulations I am proposing today do not require ports to build any new facilities; they merely require them to ensure that facilities for the reception of ship-generated sewage are available to those port users who need them. That can be achieved through arrangements under which one or more licensed contractors have access to the port and provide a commercial service to users. Therefore, we do not think that the measure is unduly burdensome. We have worked closely with the industry to keep the burdens to a minimum, and the provisions will apply throughout the EU, as other member states must comply with the directive.
	I should also stress that the provision of port waste reception facilities is one of the requirements contained in MARPOL, the international convention which, as I said at the outset, is intended to prevent pollution from ships. The MARPOL annexe, which addresses ship-generated sewage, has been ratified by more than 120 states worldwide. Accordingly, all those states should be taking steps to ensure that sewage reception facilities are available to users of their ports.
	The noble Lord asked what proportion of ports already have facilities. We do not have accurate figures on that, but, as I said, there is no legal obligation to build sewage treatment plants, so it is not an issue of direct concern here. Although the number may not be high, there is no obligation to build facilities, provided that contracting arrangements are in place.
	The noble Lord asked about enforcement. Enforcement will be on the same lines as for oils, waste and garbage under the existing 2003 regulations. There will be no new enforcement regime. He asked why it had taken so long to produce the regulations, considering that annexe 4 of MARPOL came into force in September 2003. The answer is to do with the nature of the consultation that we have undertaken. We initially consulted on the regulations in 2005. After considering responses to the consultation from the industry, we felt that further discussion with the European Commission and other member states was needed to clarify the intention of the 2000 directive about sewage. Directive 2007/71/EC provided the helpful clarification needed. Once the 2007 directive was introduced, we were able to publish further consultation with amended regulations for the industry to consider. It is to try to accommodate as best we can the concerns of the industry that we have undergone this second consultation process and the process of clarification with the Commission.
	I think that we have met most of the points of concern raised. We have sought to keep the new burdens to a minimum. I stress again that the new burdens do not require ports themselves to build sewage treatment facilities, but require them to have contracting arrangements in place to comply with the new requirements. On that basis, we think that this is a fair way to meet our international obligations.
	Motion agreed.

Civil Procedure (Amendment No. 2) Rules 2009
	 — 
	Motion to Approve

Moved By Lord Bach
	That the draft Rules laid before the House on 3 December 2008 be approved.
	Relevant document: 1st report from the Joint Committee on Statutory Instruments.

Lord Bach: My Lords, I hope that it is agreeable to the House that with this we debate the Rules of the Supreme Court (Northern Ireland) (Amendment No. 3) 2008. Both sets of rules were laid before Parliament on 3 December last.
	The Counter-Terrorism Act 2008 provides for financial restrictions proceedings, which are proceedings on an application to set aside a financial restrictions decision or on any matter arising from such an application. The Civil Procedure (Amendment No. 2) Rules 2008 insert a new Part 79 into the Civil Procedure Rules 1998 and set out the procedure for such applications to the High Court of England and Wales and any appeal to the Court of Appeal. The Rules of the Supreme Court (Northern Ireland)(Amendment No.3) 2008 inserts new Order 116B into the Rules of the Supreme Court of Northern Ireland 1980 and makes corresponding provisions.
	I shall say a word about the legislative context. Both sets of rules were made by the Lord Chancellor in exercise of powers under Section 72 of the Act on 2 December 2008, shortly after it received Royal Assent. The Lord Chief Justice of England and Wales and the Lord Chief Justice of Northern Ireland were consulted on the rules which will apply in their respective jurisdictions and were both content. The rules came into force on 4 December 2008, but will cease to continue to have effect unless they are approved by both Houses of Parliament.
	For England and Wales, amendments to the Civil Procedure Rules 1998 are usually made by the Civil Procedure Rule Committee, which is the body with statutory responsibility for making the relevant rules of court. In Northern Ireland, amendments to the Rules of the Supreme Court (Northern Ireland) 1980 are usually made by the Supreme Court Rules Committee of Northern Ireland, which is the body with statutory responsibility for making the Northern Ireland rules.
	In order that the rules can be made as soon as possible on Royal Assent of the Bill, Part 6 of the Counter-Terrorism Act 2008 authorises the Lord Chancellor to make rules of court in the first instance after the Act is passed, subject to consulting the appropriate Lord Chief Justice, which he has done. Any subsequent rules or amendments made by either the Civil Procedure Rule Committee or the Supreme Court Rules Committee of Northern Ireland will be subject to the normal rule-making requirements, including the parliamentary negative procedure.
	Prior to these rules being made, there was no specific provision in either the Civil Procedure Rules 1998 or the Rules of the Supreme Court (Northern Ireland) 1980 to deal with financial restrictions proceedings. Rules are required, however, as it is expected that although financial restrictions decisions can be based on open or closed material, subsequent court proceedings will regularly involve the use of closed material and special advocates, and the Act sets out what the rules of court must or may provide. This includes making rules of court to govern the use of closed material and the use of special advocates.
	Closed material has been used as evidence in asset-freezing decisions since 2006, when the Treasury announced its intention to do so where there are strong operational reasons to impose an asset freeze but there is insufficient open evidence. However, any reliance on that closed material in any subsequent court proceedings on such decisions has until now been dependent on the court being willing to exercise its inherent jurisdiction to order a closed hearing and to order the appointment of a special advocate. The question of whether and when the court should exercise its jurisdiction in this was one of the points at issue in the case of A, K, M, Q & G v HM Treasury, which was considered by the Court of Appeal last year.
	The use of special advocates was developed as a means of mitigating disadvantage to a party who has been excluded from a hearing or from whom information relevant to his or her case is withheld on the ground that such disclosure would be contrary to the public interest. However, the need for a special advocate would arise only if the court could be persuaded that it should consider certain evidence at a closed hearing at which one of the parties and their legal representatives would not be present. The special advocate would represent that party's interests.
	However, since the Treasury's decision in 2006 to rely on closed material in asset-freezing decisions, it became apparent that many if not most subsequent court proceedings on asset-freezing decisions would involve consideration of closed material, without which the Treasury could not defend its decisions fully. It was therefore felt that it was appropriate to provide for this by way of legislation, and by consequent rules of court, rather than relying on the court's willingness to exercise its inherent jurisdiction in each case. It was felt that this would bring it into line with other areas where closed evidence is often central to proceedings.
	Similar considerations apply in the case of decisions taken under Part 2 of the Anti-terrorism, Crime and Security Act 2001. The new powers introduced in Schedule 7 to the Counter-Terrorism Act 2008 may also involve decisions being taken that are based on closed material. For the Treasury to be able to defend such decisions fully, the court would need to consider closed material. Accordingly, it was felt that challenges to decisions taken under these powers should also be made subject to the new procedures.
	Special advocates are appointed by the Attorney-General. The fundamental feature of all special advocate systems is that, once the special advocate has received closed material, all direct communication between the special advocate and the party whose interest that advocate is representing and their legal representatives must cease, unless the court has given its consent. In relation to other proceedings, the Government have established very similar statutory procedures involving closed material and the use of special advocates. These include proceedings before the Special Immigration Appeals Commission—SIAC—and control order proceedings in the High Court.
	The new amendments to the Civil Procedure Rules and the Rules of the Supreme Court of Northern Ireland are based on the general principle that, subject to the new rules on financial restrictions proceedings, the other provisions of the Civil Procedure Rules and the Rules of the Supreme Court of Northern Ireland should apply to these proceedings and any subsequent appeals, subject to any necessary modifications. Such modifications and disapplication of parts of the Civil Procedure Rules and the Rules of the Supreme Court of Northern Ireland have been minimised as far as possible. The overriding objective in Part 1 of the Civil Procedure Rules and Order 1 of the Rules of the Supreme Court of Northern Ireland, which requires the court to deal with cases justly, is to be read as including a requirement that the court in financial restriction proceedings will ensure that information is not disclosed contrary to the public interest. A similar modification to the overriding objective already exists in relation to control order proceedings. Some general rules about evidence and disclosure are also disapplied in favour of the rules dealing with financial restrictions proceedings.
	There is nothing in these rules that has not already been debated and approved by both Houses. I have outlined the substantive provisions of these statutory instruments and I beg to move.

Lord Bew: My Lords, I thank the Minister for introducing the instrument, which, in effect, applies the financial restrictions proceedings provisions of Part 6 of the Counter-Terrorism Act 2008 to Northern Ireland. As a supporter of that Act, I welcome the logical extension of its remits. However, we are dealing with counterterrorist legislation. It is always a delicate matter, and it is necessary to tread a little carefully. In particular, we should acknowledge that we are in a sense creating a new form of jurisdiction here.
	In the other place, the Minister conceded in the delegated legislation committee that there had perhaps been slightly less consultation on this matter in Northern Ireland than in England and Wales. In particular, I am not aware that the Northern Ireland Human Rights Commission was consulted. However, I am very relieved that, as the Minister has already stated, the Lord Chief Justice of Northern Ireland, who had a particular problem with the Government's proposals, is now happy with what we have before us. That is important and reassuring.
	There remain perhaps only two loose ends in rather a complicated piece of legislation. One relates to the special advocates, which the Minister has discussed carefully this evening. As is clear from his remarks, the special advocates will have access to sensitive intelligence material. An issue arises as to the quality of the vetting that special advocates will receive. That is why the Government have said that they will be subject to the same vetting as civil servants, with one or two procedural differences that are appropriate to their professions. Can the Minister say whether this is a genuinely high level of clearance? It follows logically from his earlier remarks that it must be, given the sensitive material to which special advocates are likely to have access.
	Secondly and finally, it is well known that Northern Ireland terrorists of all shades employ corporate vehicles, small and medium-sized enterprise fronts, as cover for smuggling, protection and drug rackets. It has caused some surprise that these rules at this point do not seem explicitly to apply to SMEs or incorporated vehicles. Can the Minister offer clarification on that?

Lord Henley: My Lords, I thank the Minister for giving that detailed explanation of what is in the two instruments. I listened to what he had to say with great care. I have also read what his colleague said in the Commons when these instruments went through last week. I looked at the questions that my honourable friend Mr Bellingham and others put to the Government on that occasion. Most of those queries have been answered, so I shall repeat only one question on behalf of my honourable friend. He asked,
	"why the rules are so far-reaching that they allow proceedings to be carried on with and determined without a hearing taking place at all?".—[Official Report, Commons, Eleventh Delegated Legislation Committee, 21/1/09; col. 6.]
	Perhaps the Minister could give an explanation in advance of his honourable friend writing to my honourable friend. That would be useful. Other than that, I can confirm that we believe that these are non-controversial.

Lord Thomas of Gresford: My Lords, President Obama, in his inauguration speech two weeks ago, said:
	"As for our common defense, we reject as false the choice between our safety and our ideals. Our founding fathers, faced with perils that we can scarcely imagine, drafted a charter to assure the rule of law and the rights of man, a charter expanded by the blood of generations. Those ideals still light the world, and we will not give them up for expedience's sake".
	The rule of law and the rights of man, to which President Obama referred, are expressed in our concept of justice, which is central to procedural fairness. Under the Civil Procedure Rules 1998, paragraph (1) of Rule 1.1 states that the overriding objective of the rules is to enable,
	"the court to deal with cases justly".
	That is defined in paragraph (2)(a) as,
	"ensuring that the parties are on an equal footing".
	Therefore, it is not surprising that when these rules are brought before the House we see that the objective has to be modified. Rule 79.2 of the new rules states that,
	"the overriding objective in Part 1, and so far as relevant any other rule, must be read and given effect in a way which is compatible with the duty set out in paragraph (2)".
	That duty is:
	"The court will ensure that information is not disclosed contrary to the public interest".
	In other words, the rules recognise that there will be inequality between the person against whom the order is made and Her Majesty's Treasury, which makes it. It is not a technicality. It demonstrates how far this Government have moved away from those ideals, which President Obama declared that he would not give up for the sake of expedience.
	It is a matter of regret that the special advocate procedure has now been extended to this area. It is an area where a person may be paralysed by having his assets frozen. I just ask your Lordships to consider what it would be like if your bank account was frozen, if you could get no cash out of the cash machine downstairs and if your credit cards were worthless. How would you get home tonight? A person can be paralysed by an order made by the Treasury without any recourse to the courts. It will be observed that nothing in these new rules requires the Treasury to go to court to obtain an order to freeze assets; it can do it of its own volition. This is concerned with an application to set aside a financial restrictions decision that is made by the Treasury, which can be, in an utterly arbitrary way, based on information that it refused to disclose when making the order and will resist in disclosing when an application is made to set aside that order.
	We on these Benches have opposed the whole concept of special advocates from the moment they were introduced about eight years ago. What are special advocates? Lord Justice Sedley, in a decision on 12 September 2008 in Murungaru v the Secretary of State for the Home Department, says:
	"A special advocate system is thus not a substitute for the common law principle that everyone facing an accusation made by the state is entitled to a fair chance to know the evidence in support of it and to test and answer it in a public hearing".
	He continues:
	"The help of the special advocate is to be sought if, but only if, the interests of justice require it: it is a last resort if all other means of doing justice fail".
	He then refers to the judgment of the noble and learned Lord, Lord Bingham, in the case of H in the Judicial Committee of this House, and to that of the noble and learned Lord, Lord Woolf, in the case of Roberts v the Parole Board. He states:
	"The availability of a special advocate can never be a reason for reducing the procedural protections which the law otherwise guarantees".
	The Minister referred in his opening remarks to the subsequent Court of Appeal decision, A, K, M, Q and G v HM Treasury, where Lord Justice Sedley repeated those observations and was supported by the Master of the Rolls in so doing.
	As I say, we have opposed the principle of special advocates throughout. In 2003, my noble friend Lord Goodhart said:
	"First, both my noble friend Lord Carlile of Berriew and the Joint Committee"—
	the Joint Committee on Human Rights—
	"have pointed out the profoundly unsatisfactory nature of the special advocate procedure. It is most unsatisfactory, for example, that an advocate cannot question the person on whose behalf he or she is acting. We recognise that there may be exceptional cases where that is justified because of the importance of protection of sources and not disclosing too much about what we know. However, the closed procedure, as it is called, should only be adopted where it is absolutely necessary and evidence should wherever possible be open".—[Official Report, 11/3/03; col. 1296.]
	He repeated those views in 2005, when he said:
	"It is a very unsatisfactory procedure. It has been considered by a report of the Constitutional Affairs Committee of the House of Commons that was published just before the Recess. That stated that the special advocate system should be operated only under the most exceptional circumstances. I wholeheartedly agree. One of the most objectionable features of the special advocate procedure is the ban on contact between the controlled person and the special advocate following the disclosure of closed material to the special advocate".—[Official Report, 7/4/05; col. 790.]
	The system has developed in such a way that a special advocate who has been appointed is then allowed to see what is being withheld, but he may not take instructions on it. He cannot go back to the person concerned and say, "They are saying this about you. What is your response?". That is bad enough in the sort of procedures for which special advocates have been employed. In this case, the Treasury has itself made a decision and imposed a freezing order but has refused to say why and has refused to disclose anything to the person concerned, who may have a full explanation of why he is in possession of certain assets. This area creates even greater injustice than was the case before.
	It is interesting to look at the views that have been expressed by special advocates in the past. Mr Ian Macdonald QC resigned as a special advocate on 1 November 2004, saying that he had taken the job because he thought that he might be able to make a difference and so that he could see how everything worked from the inside. But he concluded:
	"I now feel that whatever difference I might make as a special advocate on the inside is outweighed by the operation of a law fundamentally flawed and contrary to our deepest notions of justice. My role has been altered to provide a false legitimacy to indefinite detention"—
	he was talking, of course, about indefinite detention at that time—
	"without knowledge of the accusations being made and without any kind of criminal charge or trial. For me this is untenable. No other country in Europe has felt it necessary to follow this course ... Such a law is an odious blot on our legal landscape".
	That is a special advocate speaking from his own experience.
	In its report of 2006-07, the Joint Committee on Human Rights, having interviewed special advocates and listened to their evidence, said:
	"After listening to the evidence of the Special Advocates, we found it hard not to reach for well worn descriptions of it as 'Kafkaesque' or like the Star Chamber. The Special Advocates agreed when it was put to them that, in the light of the concerns they had raised, 'the public should be left in absolutely no doubt that what is happening ... has absolutely nothing to do with the traditions of adversarial justice as we have come to understand them in the British legal system'".
	It went on:
	"Indeed, we were left with the very strong feeling that this is a process which is not just offensive to the basic principles of adversarial justice in which lawyers are steeped, but it is very much against basic notions of fair play as the lay public would understand them".
	It has returned to this issue on a number of occasions and, in particular, commented on the decision in MB v the Secretary of State for the Home Department.
	Your Lordships have had the views of the Joint Committee, the views of the special advocate and the views of my noble friend Lord Goodhart, but what has the judicial arm of this House said? The noble and learned Lord, Lord Bingham, said in the case of MB v the Secretary of State:
	"In any ordinary case, a client instructs his advocate what his defence is to the charges made against him, briefs the advocate on the weaknesses and vulnerability of the adverse witnesses, and indicates whatever evidence is available by way of rebuttal. This is a process which it may be impossible to adopt if the controlled person does not know the allegations made against him and cannot therefore give meaningful instructions, and the special advocate, once he knows what the allegations are, cannot tell the controlled person or seek instructions without permission, which in practice (as I understand) is not given. 'Grave disadvantage' is not, I think, an exaggerated description of the controlled person's position".
	I made some comments at that time but I shall not weary your Lordships with what I said on a previous occasion. Indeed, the Joint Committee on Human Rights commented on it later.
	These rules are an extension of the special advocate system and, according to what the Minister said, they will be extended in most of these cases. These financial restriction orders freezing assets are to be made by the Treasury on undisclosed material. The special advocate will not be able to take instructions except, under the terms of the rules, by making an application to the court, to which the Treasury may object. The rules set out in detail what the special advocate has to do if he wishes to communicate any of the allegations on which the orders are made to his client. He has to go to court. But, as the noble and learned Lord, Lord Bingham, said in the judgment in MB, the court rarely gives permission. It is moved by the submissions that are made and by the fact that all is very secret and must not be disclosed and so on.
	The system is wholly unsatisfactory. Instead of resolving it in the way that has been recommended by the Joint Committee on Human Rights, by the Constitutional Affairs Committee, by submissions that are made and judgments that are given, the Government have done nothing about it and in these rules are simply continuing an unacceptable and unjust system. I come back to where I started, with President Obama's words: we should ourselves reject as false the choice between our safety and our ideals.

Lord Bach: I thank all noble Lords who have spoken in this debate. I shall deal first with the question asked by the noble Lord, Lord Bew. I am grateful for having had some advance notice of what he was going to say. He asked about the vetting of special advocates and about small and medium-sized enterprises, known as SMEs. The vetting procedure for special advocates is, as I think he indicated, substantially the same as the developed vetting procedure that civil servants go through before being cleared to work in areas involving access to sensitive material. This involves credit checks, interviews and criminal checks. It can be described as a high level of vetting.
	The noble Lord asked, completely appropriately, about small businesses. This point was dealt with in a letter that my honourable friend Bridget Prentice, who spoke on behalf of the Government when these rules were being debated last week in the other place, placed in the Library. She said:
	"A question was asked whether or not these rules apply to small businesses. I believe that this question has arisen as a result of a statement in paragraph 11 of the Explanatory Memorandum to these rules which states that this legislation does not apply to small businesses".
	She went on to say:
	"This legislation does apply to small businesses. What the Explanatory Memorandum should have indicated was that the legislation does not impact on the regulation affecting small businesses".
	I am grateful to have the chance to repeat in this House what my honourable friend said in her letter.
	I thank the noble Lord, Lord Henley, for his comments and for their brevity. He referred, quite rightly, to a question that his honourable friend Mr Bellingham asked in the other place about whether it was possible to do this without a hearing. In her letter, Mrs Prentice said:
	"I would like to reassure the Committee"—
	I hope that I am also reassuring the House tonight—
	"that in no way do the rules of court seek to prevent parties or their legal representative from being present for the determination of proceedings at a hearing. Rule 79.17(1) of the Civil Procedure Rules 1998 and Rule 22.1 in Order 116B of the Rules of the Supreme Court of Northern Ireland 1980 make it clear that all proceedings must be determined at a hearing and although there are exceptions, these would apply where the proceedings are no longer contested, are withdrawn, or where all the parties agree to determination without a hearing".
	I thank the noble Lord, Lord Thomas of Gresford, for his contribution. I admire and respect his consistency on this topic. But it compares peculiarly with what his honourable friend Mr Brake said on behalf of the Liberal Democrat Front Bench at the hearing last week. He said that he was looking forward to having the questions answered, which was fair enough, and then he said:
	"However, on the basis that I have been advised that these measures are not controversial, I will certainly not seek to delay their progress".—[Official Report, Commons, Eleventh Delegated Legislation Committee, 21/1/09; col. 7]
	I would hate to see any proposals that were controversial. Powerful arguments were put forward by the noble Lord, Lord Thomas of Gresford. I cannot accept them on behalf of the Government. The House will be relieved to hear that I shall not go into the issue in detail now, but I hope that he accepts, as I am sure he does, that where terrorists are planning to commit offences against innocent people, they need funding. It is vital that Her Majesty's Treasury act at once to freeze that funding as soon as its existence is known. The statutory instruments set out how an applicant who complains about those assets being frozen can apply to the court to oppose the action of the Treasury. That is the background to the instruments, which are parallel—one for England and Wales, and one for Northern Ireland.
	As to whether fundamental liberties have been put at stake by the existence of special advocates and closed material, the Government have consistently made clear their view that the measures in the Prevention of Terrorism Act 2005, including the special advocates procedures, are fair and fully compliant with the European Convention on Human Rights. That view has been upheld in the Court of Appeal. For the same reasons, we consider that the measures in Counter-Terrorism Act are fully compliant.
	To try to relieve the noble Lord, Lord Thomas of Gresford, of one of his concerns, I emphasise that, wherever possible, material will be dealt with in open court, where the designated person is represented by legal representatives of their choosing. Where there is closed material, a special advocate will be appointed to represent that designated person. The individuals will be aware of the open case against them. Nothing in the CT Act or these rules of court made under it requires the court to act in a manner incompatible with the right of the applicant to a fair hearing. A very similar special advocate scheme was recently held by the House of Lords to be human rights compliant.
	I know that I shall not persuade the noble Lord that it is right that the Government have sometimes to use these procedures, but it is our view that, to prevent terrorism and to make sure that it is unsuccessful, these measures sometimes have to be taken. They will not be taken unless it is necessary to do so.
	Motion agreed.

Rules of the Supreme Court (Northern Ireland) (Amendment No. 3) 2009

Copy of the Rule
	1st Report from JCSI

Motion to Approve

Moved By Lord Bach
	That the draft rules laid before the House on 3 December 2008 be approved.
	Relevant document: 1st Report from the Joint Committee on Statutory Instruments.
	Motion agreed.

Euro
	 — 
	Question for Short Debate

Tabled By Lord Dykes
	To ask Her Majesty's Government whether they will undertake an analysis of the prospects for United Kingdom membership of the euro, including the effects of delay on achieving membership.

Lord Dykes: My Lords, I am very grateful for the opportunity to raise a matter which has already been raised on several occasions in the House recently. The arguments for joining the euro zone as soon as circumstances permit have grown stronger in light of the recent financial crises which show no signs of abating in either this country or elsewhere. Others may hesitate and seek to invoke those very crises as reasons for postponing yet again consideration of this matter but I believe that the reverse applies. I was delighted at the strong leadership shown by Nick Clegg in another place, with his article in Monday's Independent advocating this target as soon as the circumstances were propitious and utilised. It also brought our party back to the original robust advocacy of the euro by Charles Kennedy, who as leader even went so far as, quite rightly, to set a date for the announcement of our application to move into the euro zone.
	I thank the noble Lord, Lord Myners, for coming today to wind up this important short debate. We are, in a way, old friends from our City days many years ago. I have much admired the way in which he has settled into this House and plunged in, in medias res, with a hefty workload on the global financial crisis and major legislation, as if he had been an experienced Member of this place for quite a long time.
	I also thank my noble friend Lord Newby for being on parade yet again, despite a very heavy work schedule on the very same legislation and with some other pressing economic tasks thrown in. I thank the noble Lord, Lord Taverne, not only for an outstanding and original speech on this subject in December, in the debate on the Loyal Address, but for coming along to speak today.
	We are coming to a crunch decision-time on this matter. Arguably—others may have other examples—the two biggest blunders made by the Governments of Blair and Brown since 1997 were, first, the failure to follow up on the euro pledge, and, secondly, the illegal war in Iraq. Other noble Lords might cite many other examples, but nothing really measures up to the setback to this country from those two instances.
	Looking back at the financial crisis and its roots, and without simply being wise after the event, we now can see the incredible weaknesses of our old-fashioned and timid UK system. There was the notion, up to last year, that the free markets knew everything—nonsense which has been imbued in us and in the press, particularly the right-wing newspapers. There was also arrogance among certain practitioners in the City about that very philosophy. The very low level of real investment in Britain has continued to be a serious problem. High interest rates had to be propped up, and we had to pretend that the pound was a leading, strong currency. There was excessive frenzy in home-buying which inflated prices and increased the numbers buying to let. More and more, speculation in property was encouraged as the only virtue and the only scene in town. There were huge and growing trade deficits. All that flim-flam and candyfloss were rolled into one, with excessive greed and shameful bonuses thrown in as well.
	Let us contrast that with the more cautious and prudent German approach, with high savings ratios, major new investments in real assets on a continuing basis, a relatively small stock market, low levels of bank and credit card debt, and most of their growth going into exports in spectacular fashion. My word, don't those German chaps let us down with their old-fashioned habits?
	I also much admired the courageous ways in which virtually all the French political classes, except the National Front and the Communist Party, educated the French public for well over 10 years about the virtues of the strong currency as a precursor to entry into the European monetary system. If only the Government here had done that as well. We have now wasted eight years of dither and delay on this matter. If the Government here had the drive, with equal bravery to the French, to start explaining the merits of the euro system to the public, it would still take some time to get in. There is a minimum two-year period to wait at the start, and then it depends on the circumstances. Would the other countries accept our devaluing the currency yet again? It has already fallen by more than one-fifth since midsummer.
	It would also entail getting rid of the referendumitis that has bedevilled this country's politics in recent times. That would be a painful decision. I commend the Government for doing so, with great acclaim from us and others, on the Lisbon treaty, which was a different document from the original document. The task and objective of getting rid of the excessive obsession with referendums will have to be confronted on this matter, and probably others in future. So, full credit to Gordon Brown for what he and the Government did last summer with the Lisbon treaty Bill.
	The worsening crisis here may enhance the need to grasp this nettle at long last, even though the UK central bank interest rate is now below the euro zone rate for the second time recently. I asked the then Minister to respond to those points in my speech, on 4 December, in the debate on the Loyal Address, but, sadly, he declined. We have witnessed instead the time-honoured British wheeze of letting the pound come down yet again. It is not a formal devaluation, but it is the fifth time since the war that there has been a major reduction in the value of the pound. Meanwhile, the euro has apparently become one of the strongest currencies in the world. Interestingly, too, despite crises everywhere, all the new member states remain keen to join, including Slovenia, Malta and Cyprus, with the two still eccentric exceptions of Poland and the Czech Republic. Incidentally, the Chinese Government regarded the creation of the euro as the most spectacular achievement of single-market creativity ever witnessed in post-war Europe.
	I hope that the noble Lord, Lord Myners, will not hark back tonight to the infamous "back of the envelope" five conditions, which, if he will forgive the phrase, are in my mind pure Mickey Mouse. They are thanks, presumably, to Mr Ed Balls' excessive imaginary fantasies. I remind the House of the overarching and longstanding advantages of the euro to its member countries. First, there is instant price transparency for customers and consumers in nearly 20 countries, and the neighbours are using the euro more and more as a pro tem side-by-side currency. Even one non-member, Iceland—for fairly obvious reasons right now—wants to become a member, too.
	Secondly, there are huge savings for companies and individuals on exchange costs—which, in the real-world marketplace, are often rip-off costs—and freedom from excessive credit card charges on currency exchanges. Weaker members also benefit from very low interest rates which keep both real and money costs down. For us in Britain, keeping the pound also seems, unhappily, to be a long-running Treasury plot to retain its power nexus in the British system. Meanwhile euro-denominated investment bonds are regarded as safe-haven investments worldwide, unmatched, I think, in market valuation terms apart from some in Asia.
	The European monetary system is also a political development enhancing the operational unity of sovereign member states working closely together. Although the ECB is not a customary lender of last resort in the conventional, national central bank sense, its established reputation, power and authority give it the ability to provide the huge insurance-type phenomenon of support and cover for weaker members, too, as long as they strive to adhere to the discipline, rules, and normative objectives of the EMS system and policy.
	In his FT article of 3 June 2008, Willem Buiter said:
	"there is no reasonable argument for a small, highly open economy like Britain to retain monetary independence ... the exchange rate does not act as a buffer against asymmetric shocks ... it becomes a source of ... unnecessary ... volatility".
	He went on to say that the UK has massive gross external liabilities—at that time some 400 per cent of annual GDP, compared with 100 percent for the US and a mighty 700 per cent for tiny Iceland. Despite these exposures, it has only the Bank of England's lender-of-last-resort capacity for sterling liabilities, which is a much more modest figure. Sterling now makes up less than 5 per cent of world reserves of leading currencies.
	In a way, the mirror image of these sombre realities is expressed in Peter Sutherland's conclusion in a booklet on the euro. He reminds us on page 188:
	"The last time the UK had a balance of payments surplus was (for one quarter only) 1998, and by mid-2008 the deficit had reached 3% of GDP".
	These deficits, he said,
	"will have to decline, and there are only two mechanisms for this—a recession which reduces imports and a fall in the pound. We will get both, but there is a serious risk of a full scale sterling crisis".
	Meanwhile the Government dither; the Tory Party, apart from Ken Clarke, pretends that the EU does not actually exist; UKIP wants to leave when it has grown tired of drawing the generous emoluments of the European Parliament; and only we on these Benches fight on for common sense and sanity. Perhaps, as I said, people want to look away and avoid seeing the results because the euro is a political development as well as a financial and economic one. I believe that it is none the worse for that. Surely it will get more difficult for us to join the euro on fair terms the longer we procrastinate, for no reason other than fear itself. Does the Minister agree?

Lord Lea of Crondall: My Lords, I congratulate the noble Lord, Lord Dykes, on securing this timely debate. I begin by listing three largely incontrovertible facts. My noble friend will of course have the opportunity to put his own gloss on these when he winds up.
	First, it is still government policy to join the euro when the five economic tests have been met. Secondly, the five tests have now been met, as was conclusively demonstrated by Willem Buiter in the booklet published earlier this month, to which the noble Lord, Lord Dykes, referred. I also contributed to that booklet, and so I am speaking in that context.
	After those first two points, the logical third point is, ergo, await an early government announcement, or perhaps not. The five tests seem to be a movable feast rather than, as one had assumed, a periodic examination. But the unstated objection is, first, that we will not win a referendum, so, secondly, we cannot start a campaign and, so, thirdly, we are stuck where we are. But equally the world has changed irrevocably and I shall spell out why these frozen politics are absurd now that economics have been unfrozen in such a spectacular way.
	We cannot, if we are to look further than the end of our noses, which many people refuse to do, refuse to look again at all our options. Far from "talking the pound down", we advocate that now is the time to consider the modalities of fixing the rate. Our opponents view regular devaluations with equanimity. The tenth anniversary of the setting up the eurozone and fixing the rate is, of course, also the tenth anniversary of the last serious debate in this country, not just among politicians but in industry, among trade unionists, the media, the retail trade, financial services, manufacturing, tourism and everybody in all the regions of Britain. But like Rip Van Winkle, we have had our head firmly under the pillow ever since.
	The year 1999 also marked the high point of Gordon Brown's enthusiasm. It is opportune on this anniversary to revisit his overview at that time, which is conveniently set out in the speech he made at a TUC conference in May 1999 on unions and the euro, and is reproduced in the back of the booklet. In his words:
	"We are the first government to state that there is no overriding constitutional barrier to membership".
	His characterisation of the political economy of the eurozone is worth quoting in full. He continues:
	"Their macro economic stability is to be pursued through monetary union ... through a single currency, intended as it does to remove unnecessary currency speculation within Europe, to reduce transaction costs which are a barrier and a big expense to business often at the expense of employment ... We are the first British government to declare for the principle of that currency union".
	Perhaps the Minister will confirm that this statement by Gordon Brown is still the policy of Her Majesty's Government.
	The then Chancellor attached particular emphasis to the central dimension of stability provided by a settled exchange rate with the rest of the economic area in which we carry out most of our trade. That, of course, is the European economic area in which European, including British, multinationals make most of their living.
	It is also true—although I am not sure whether we should or should not venture on to this territory this afternoon—that exchange rate stability and the attendant removal of the transaction costs inside that zone, and currency movements, which can be hedged against, of course, but that is still an unnecessary barrier, beg the question of the correct rate at which to join.
	It is worth noting that the rate today, when one euro equals 93p, might not be the rate available in two years' time, any more than the rate of roughly 66p to the euro in January 1999. Looked at the other way round, we have now slipped over two-thirds of the way to parity with the euro and our economic fundamentals may mean that if we want to stop in our tracks before that comes about, we need to do something about it.
	British industry is not looking for a lower rate than parity; it is now looking for some stability, and this logically extends to mutual support for reserves at certain exchange rates, though this has not been openly talked about so far.
	It is sometimes said that the UK's ejection from the exchange rate mechanism in 1992 is a convincing argument for not going into the eurozone. In fact, of course, as even the noble Lord, Lord Lamont, would, I think, accept, these are two totally different and non-comparable scenarios if fixing the rate at parity amounted to us entering the waiting room to the euro.
	What is the UK's alternative to the euro in terms of credible currency zones? I do not hear anyone arguing that now is the time to become the 51st state of the USA or to join China. The depth of our involvement in the EU is growing, and that is one of those facts much debated by the historicist tendency. It is a question of the present circumstances being extraordinarily difficult for all of us; but that cuts both ways. We cannot expect perfection in co-ordination, though crocodile tears about the eurozone's difficulties in co-ordination are not very dignified either.
	In 1999, the sceptic group forecast that the euro would fall apart. That scepticism has now had to be reduced to a stark combination of chauvinism and a protection of narrow City interests, given the reluctant recognition that the ECB has become a highly respected institution and the currency, for India and China, has increasingly become a candidate for the status of a reserve currency, alongside or in substitution for the US dollar. That familiarity with the euro is now self-reinforcing also in Africa, Asia, Latin America and the OECD area. Unfortunately, the pound is nowhere by comparison.
	As Gordon Brown concluded in 1999, to,
	"withdraw from Europe or go outside Europe's mainstream and become a Hong Kong of Europe—a low wage competitor with the Far East—or a tax haven servicing major trading blocs—the idea of a greater Guernsey—only needs a minute's consideration to be rejected".
	Perhaps I may add his concluding and particularly apposite remark:
	"Our view has been that, instead of the old wait and see attitude which came from the last government, we must make the preparations which are necessary to allow us to make a genuine decision, subject to a referendum of the people of this country. So our policy is not 'wait and see' but 'prepare and decide'.".
	Where are we, and where can we go from here? It is now surely overdue, given what I have sketched out, for us to set out a road map, perhaps including a preliminary question that ought to attract even the support of William Hague, though probably not of the noble Lord, Lord Lamont: "Do you want to save the pound by stopping it falling below parity with the euro?". I think that the answer would be yes. The Murdoch press would be against it, of course, but it cannot fool all the people all of the time on this or on any other matter, as that empire moves towards its decline and fall.
	Many of those politicians who say that they support floating or devaluation today are the same politicians who would cry crocodile tears for the country's plight and try to make political capital out of it if the pound fell below parity. The opportunity may well arise for us to hold the pound-euro rate at parity, though that, too, would need a good deal of preparation and agreement with our main continental allies. That halfway house would then de facto be the first step to joining, as it would mean that we were part of the euro-pound area. Indeed, to those who ask, "What is so magical about parity?", my answer is, "It is a once-in-a-lifetime opportunity for the British people to get used to the euro-pound area".
	I part company with the conventional wisdom that suggests that this is all too much of a political nightmare. On the contrary, the British people are renowned for their respect for and acceptance of pragmatic, step-by-step approaches to solving problems, as in the approach that I have outlined; if only this was put in a straightforward way to them. On that point, if I may coin a phrase, there is no alternative.
	Finally, I urge my noble friend and his colleagues in government not only to give this serious consideration but to lift the veil of omerta which for far too long has smothered this issue in unreason—which is not, in my submission, a dignified way to address this great question about our national future.

Lord Sheikh: My Lords, at the outset, I apologise to your Lordships' House for my late arrival for the commencement of the debate. I should like to thank the noble Lord, Lord Dykes, for arranging this debate, which enables us to look at the various issues relating to our membership of the euro.
	The debate about the United Kingdom's membership of the European single currency has abated in recent months, as we have watched our economy and those across the European continent slide deeper and deeper into recession. There remain a number of devotees who are still pressing that we should belong to the European single currency, and who even see the current economic downturn as a fillip for their cause. I believe that those individuals are misguided.
	I have long experience in business and I share the concerns of those who see the current economic climate as deeply troubling. This is the first time, since the creation of the European single currency 10 years ago, that we have witnessed an economic downturn across the eurozone, and it will be interesting to witness how this project confronts the challenges of a recession. My instinct is not altogether positive, and there is nothing that I have seen, as yet, that has led me to want to review my stance. Ten years is not long in the life of a currency, and it is proper that we should watch what happens with interest, although, I repeat, I do not believe that we should seek to participate in the European single currency.
	It is a shame that the European Commission is so detached from the views of ordinary people in this country. I was astounded when the President of the European Commission, José Manuel Barroso, claimed in December 2008 that the United Kingdom was "closer than ever before" to entering the single currency, as a consequence of the fallout of the global financial crisis. I could not disagree with him more. His confidence, which rests on the basis of his comments that,
	"some British politicians have already told me: 'if we had the euro, we would have been better off'"
	is fundamentally at odds with the official position of Downing Street, which states repeatedly:
	"Our position hasn't changed ... we have no plans to join the euro".
	Perhaps unsurprisingly, that view contrasts with that of the noble Lord, Lord Mandelson, who has said that,
	"our aim, our goal, should be to enter the single currency".
	I doubt whether even the Secretary of State for Business, Enterprise and Regulatory Reform would advocate that now is the right time for us to enter the single currency. I hope that the Minister will use the opportunity of this debate to clear up this mess and state categorically the position of the Government on the single currency—people have a right to know. The position of our party is clear: there are no circumstances in which the next Conservative Government will propose joining the euro.
	We have witnessed a fall in the value of sterling that has enhanced the calls of those who would willingly see us ditch our currency and rush into the single currency. However, these souls are generally the same individuals who were advocating that we should join it some 18 months ago, when the value of the pound was around 30 per cent higher than it is now. It is a fair question to ask what the consequence of taking their advice at that time would have been. One thing is certain: we would not have been protected by the exchange rate, and economic pressure would have found an alternative outlet for its expression—probably in a further reduction in jobs, or lost output. It is possible that instead of a 30 per cent reduction in the value of our currency, we would have witnessed a similar fall in other factors, which could have exacerbated the pain suffered across the whole economy. I am glad that we do not have to endure that indignity at this time.
	That point was endorsed in another place when a Labour Member of Parliament asserted:
	"Had we been in the euro, we would have been pinioned to an over-valuation that would have been catastrophic for our economy. The depreciation will at least deflect some demand to our home economy, and help us to recover".—[Official Report, Commons, 9/12/08; col. 426.]
	I might agree with the sentiments of that particular politician, but it is not apparent that that is the settled view of the Government, most particularly in their interactions with senior figures in the European institutions.
	It is an awkward reality for the countries that comprise the eurozone that they can use only fiscal adjustments, as the freedom to use monetary policy is sacrificed as a condition of entry into the single currency. That point was made clear in a report by a Select Committee of your Lordships' House in the last Session, which stated:
	"In the long run this would imply that the country loses competitiveness; it is no longer able to correct this by a devaluation of its exchange rate and can only adjust through restrained fiscal policies that will bear down on domestic cost pressures and employment".
	It is not even as though a Government within the eurozone could use complete fiscal autonomy in facing these challenges. There are tight requirements as a consequence of membership, such as the size of a member state's budget deficit.
	Our experience of the exchange rate mechanism should have demonstrated more clearly than anything that there is no permanently correct exchange rate. Were we members of the eurozone, the difficulty that we would encounter would be identical to the one that we experienced at that time: maintaining the value of our currency in relation to those across the European Union. The only difference would be that we would now be unable to take our own corrective measures, and the likely pain would be enhanced.
	The noble Lord, in proposing this debate, has elected to refer to "the prospects for the UK's membership of the euro". He has a long association with a particular view of the European Union, which is one that I do not share. In my opinion, we should be debating not the prospects for our potential membership but whether there are circumstances in which we would want to join the European single currency. My firm view is that sacrificing the independent control of our monetary policy would be far too high a price to pay. I strongly urge the Minister to clarify the confusion that we have witnessed from the Government in recent weeks and to state that we will not be seeking to join any time soon, if ever.

Lord Taverne: My Lords, we are in the middle of the most serious economic crisis of my adult lifetime. It is more serious than when I was a Treasury Minister in my youth in the late 1960s, and it was bad enough then.
	One of the most threatening aspects today is the weakness of sterling. However, the future of sterling outside the eurozone seems to be a taboo subject for both the Government and the Conservative Opposition. When I raised the issue of the pound and the euro last July, no one else took it up. The same was true in our debate on the economy last December, when the very mention of the euro produced a groan from the Conservative Benches. On the last occasion that I debated the issue, I mentioned as part of my concern the longer-term threat to the City if we stayed out of the eurozone, but the future of the City now seems a minor issue compared with the threat to sterling.
	Why is the outlook for Britain particularly gloomy, as the IMF confirms? In addition to the banking crisis there is a serious question mark over the credibility and stability of the pound. A funding crisis combined with a currency crisis is an explosive mixture. We are dangerously exposed outside the comfort of membership of a big currency area such as the eurozone.
	If there were a serious run on sterling we would face an appalling prospect. We might even have to put up interest rates and cut spending at the very time when we need lower interest rates and increased public spending. Even if, as we all hope and on the whole expect, we can avoid a serious run on the pound, in the longer term with our high public sector deficit, we are likely to have to maintain a much tighter monetary and fiscal policy than the eurozone, with much higher nominal interest rates to mop up the liquidity that we have created during this crisis. We will for some time be condemned to a lower rate of growth.
	Before the credit crunch we were doing reasonably well. I suppose we were doing better than I expected, but not as well as the Government boasted. Our productivity deteriorated somewhat compared with the average of the eurozone since the launch of the euro, but again, the relative decline in our productivity, however serious, is a comparatively minor matter. More important, the eurozone's average cyclically adjusted deficit declined from 2.7 per cent of GDP in 2004 to 1.2 per cent in 2007. Ours increased and will be dramatically higher by 2010. If we had been members it is likely that our deficit would be lower because we would have needed a tighter fiscal policy to make up for lower interest rates. That is highly relevant to the biggest issue before us now—credibility and stability.
	The pound is a barometer of international confidence. Its decline, however welcome to exporters, reflects the view of foreigners on the future of our economy. The pound has fallen dramatically in the past six months. The credibility of our fiscal policy is now in question, with the risks of holding sterling high and the rewards low and likely to become even lower. Why should anyone want to hold sterling assets? Foreign holders of sterling will want to reduce their exposure. The threat to the future of sterling is not just an immediate problem; it could well affect the level of foreign direct investment in the longer term. I have always thought that the possible decline in foreign investment in Britain was one of the strongest arguments for joining the euro. I confess that that did not happen—at least, not yet—but it is a real threat now.
	Let me sum up the argument about the dangers of sterling in very simple terms. I am a very keen sailor. If you are sailing a small boat you can explore creeks and harbours that you cannot get into with a larger boat with a deeper keel. A small boat has its advantages. But if I am caught out in a force 10 storm, by God I want to be in a bigger boat. Our prospects would be a lot less threatening if we were comfortably in the eurozone.
	When the issue is raised we are always told by the Conservatives that we must keep the right to set our own interest rates and keep a floating pound. I would seriously ask those who believe that these arguments are decisive to read the set of essays to which the noble Lord, Lord Lea, referred, which include some carefully argued and authoritative contributions from eminent economists and financial and other experts—I contributed but I do not count myself one of them. It is called Ten Years of the Euro: New Perspective for Britain. I recommend it. These essays show that the case for an independent monetary policy and a floating exchange rate is far weaker than is the current fashionable view.
	Monetary policy works with time lags that can be very long, and its effects are variable and uncertain. It is often said, for example, that control over our interest rates is needed to prevent asset bubbles, but the deputy governor of the Bank of England has admitted that interest rates are not a suitable instrument for preventing asset bubbles. The dangers of bubbles are best dealt with by appropriate regulation, and our regulation failed. We are a small, open economy. One of the ways monetary policy has effect is through the exchange rate, yet that often goes up and down unpredictably. Foreign exchange markets are, in effect, a financial casino. Many fears, phobias and sudden mood changes motivate foreign exchange traders and their principles. A floating exchange rate is not a good stabiliser. The idea that we can set our own interest rates entirely to suit our own domestic circumstances is likely to prove somewhat illusory. It is likely that international considerations and influences will exercise an increasingly important influence.
	There are other major advantages to being part of a large economy. Being a member of the eurozone would mean that, as a whole, it would be less important to specialise in financial services. The ratio of outstanding debt to GDP in a large economy is lower. Luxembourg and Ireland have highly developed financial services, but they have the eurozone as a source of liquidity. If they had not had that, they may well have followed Iceland. A large economy is too big to fail. The UK is quite large, and it is not likely to go bust, but as our currency is vulnerable, British Government-backed loans will have to be issued on unfavourable terms. To maintain aggregate demand, it is much more effective to stimulate action by co-operation than through national manipulation and exchange rate flexibility.
	My final point is political. Co-ordination is going to be more important. We will require a new European regulatory regime. It will be very important to us, and what will be our influence? Denmark and Sweden, like us, wanted to retain their independent sovereignty, but Denmark, Sweden and new members now all want to join the eurozone. There has been a dramatic swing of opinion in Denmark and Sweden, quite apart from in Iceland. We are likely to find ourselves outside the zone and more isolated than in the past, and it is not likely to be splendid isolation.
	More generally, to be a central part of an influential political group will become more important as we live in a very uncertain world. It is said that we are going to face the Asian century. It may be that we will. I am not sure; I do not know. What is going to happen in China? Will China maintain its prosperity without democracy? It is likely to face very considerable strains indeed. European co-operation will be more important than ever, and if we do not join the eurozone, our influence will be less than it has been.
	We cannot join tomorrow. The Conservatives have a gut reaction against the European Union and have never been more anti-European. The Government are not anti-European in principle, as the noble Lord, Lord Lea, said. They are still committed to membership of the zone, but they seem scared to discuss the matter publicly. They are afraid of public opinion. Not to take the option seriously at this time is wholly irresponsible. We must recognise that opinion may change very suddenly. It changed very suddenly in Ireland; it changed in Denmark, and seems to be changing in Sweden. After all, it changed pretty dramatically during the referendum campaign of 1975, so to rule out the option is an irresponsible action, and the least the Government should do is to start a serious debate.

Lord Newby: My Lords, I thank my noble friend Lord Dykes for introducing the debate.
	In recent years, debate on the euro has been almost completely sterile. The Conservatives have been implacably opposed; and Gordon Brown has, frankly, not been very different. The five tests conducted with so much rigour and fanfare were one of the most elaborate exercises in kicking an issue into the long grass in my political lifetime. I made the mistake of attempting to read the documents that the Treasury produced at the time. They are at least a foot thick. It was, in essence, an exercise in going down an intellectual cul-de-sac. It led you nowhere. That has set the tone against which a non-debate on the euro has characterised recent years.
	However, events in recent months suggest to me that we need to look afresh at almost all aspects of how we do things in our financial system and our economy. Looking afresh at the euro should be an aspect of that. As noble Lords have pointed out, recent months have seen a 30 per cent devaluation. Many people have taken great satisfaction from that because, as they rightly point out, we could not have done that in the eurozone and it will benefit exporters. I declare an interest as a non-executive director of a company that had good fortune to sign a very large contract in dollars in the middle of last year. It is undoubtedly a windfall winner, but that is not a good basis for setting policy on a currency.
	Currencies such as the pound, which are too small to attach themselves to a major reserve currency, inevitably suffer greater fluctuations than make sense from a straightforward market point of view. They overshoot in both directions. Can anyone believe that there is an underlying economic reason why our currency should have deteriorated by 30 per cent? Clearly, that is not an economic issue. Although there is an economic element to it, it is primarily a financial response to the perceived weakness of the British financial system and, subsequently, British finances.
	The noble Lord, Lord Sheikh, talked about the indignity—I think that that was the word he used—that we would now find ourselves in if we were in the eurozone at the level that the pound was in a year ago. That is a completely false analogy. If we had been in the eurozone, we would never have entered at the rate that the pound was at a year ago. The pound a year ago was overvalued. It is now undervalued. I submit that that is not something that we should be proud about, but a source of weakness.
	My noble friend Lord Taverne referred to the time when, as a young man, he was in the Treasury when we devalued in 1967.

Lord Taverne: No, my Lords, it was not then. I was there after, when we recovered.

Lord Newby: My Lords, my noble friend helped us recover from the devaluation. My recollection of that period is that the Government were very resistant to devaluation, largely because they saw it as a sign of weakness. There was an element of truth in that: it was a sign of weakness. It reflected the fact that the British economy was uncompetitive. Subsequent devaluations have equally reflected the fact that the British economy is uncompetitive. I have always asserted that the way to deal with an uncompetitive economy is not happily to see the currency depreciate, but to do something about the underlying causes of the lack of competitiveness. Perhaps that is an argument for another day, but to me, constant devaluation should not be a sign for satisfaction, although it brings short-term benefits to exporters; it should be a long-term cause for concern.
	As for what is happening elsewhere in the eurozone, and those people's views about the euro, it is instructive to compare the situation in Ireland and Iceland. Iceland was able to adopt completely reckless policies and is now bust. Ireland adopted pretty reckless policies, but it will not go bust because it is part of the eurozone. Equally, if Greece and some of the other southern European countries were not part of the eurozone today, we would have a lira crisis, a drachma crisis and probably several other crises. We all remember the whole series of currency crises across Europe in the past that were hugely detrimental to the economies of those countries and gave a permanent sense of crisis.
	As my noble friend Lord Taverne says, far from people across the rest of Europe fleeing from the euro, everyone is clambering to get in, including the Danes and the Swedes, who have been as resistant to the euro as we have been. That says something about how most decision-makers in Europe who are in or not yet in the eurozone view the role of the euro in difficult times.
	As a consequence of the current crisis, there will be moves in Europe to strengthen European institutions to try to ensure that such crises do not happen again and that we, because we are not members of the eurozone, will be missing from many of the discussions. In the autumn, the Prime Minister made a guest appearance at the meeting of the eurozone Finance Ministers. There was a crisis, and he was the Prime Minister of Britain visiting Finance Ministers, so they let him in, gave him an audience, patted him on the head and said, "Thanks very much". They then closed the door. No one else from Britain was at the meeting; we were completely outwith those discussions. The eurozone finance group is increasingly powerful, and you can bet your bottom dollar—or euro—that the European Central Bank will become more powerful and will be given more responsibilities. Just as we are giving our Bank more responsibility for financial stability, it will be given more responsibility for financial stability across the eurozone and we will be totally absent from those debates and discussions, even though the outcomes of those debates and discussions will have a major impact on our economy.
	From the start, Europe was a club that we wanted to join, but if there were any rules that we did not like we would not follow them. The consequence has been simmering resentment among many of our European partners, and when that happens—it has certainly happened in relation to the euro, which is an inevitable consequence: it is human nature—we will be done down to a certain extent in the negotiations and discussions because we will not be there, and not only will our interests not be taken account of but there will be a predisposition to discount them completely. An inevitable consequence is that the eurozone will huddle together for warmth while we are out in the cold.
	On the politics, however, we must accept that the euro is extremely unpopular in the UK. I am afraid that I must part company with my noble colleague when I say that, whatever might have been the right thing to do when the euro was launched, we cannot now avoid a referendum on the euro. We have said that we would have a referendum on the euro. The British public are extraordinarily unsympathetic to and dubious about the views of politicians, for which we have ourselves in no small measure to blame. We will get acceptance of the euro only through a referendum, which I accept is difficult. We certainly could not expect to have a referendum now, because, as the noble Lord, Lord Lea, has said, there has been no campaign to have one. However, the euro was heavily perceived to be inferior. When the pound was high, that was possible to believe, but that is no longer the case. How different things will look if the recession is shorter and shallower in France and Germany and when people look at the cost of buying their holidays in Europe. Once the immediate effects of the sterling collapse wear off, will exporters start asking questions about the value of having such a volatile currency?
	The deeply held view in the past that Britain's economy is a cut above Europe's is about to take a terrible battering, and I hope that the ideological debates on this issue will now give way to a more sober and pragmatic assessment of the economic needs of millions of anxious British families.

Baroness Noakes: My Lords, I thank the noble Lord, Lord Dykes, for giving the House a further opportunity to demonstrate that there is a wide divergence of views on the merits of joining the euro. Earlier this week, I asked a Peer who would customarily give a Eurosceptic perspective in a debate such as this why he was not speaking. He told me that it was a waste of time, and advised me to say merely that I disagree with the noble Lord, Lord Dykes, and sit down. I shall resist that temptation. It is true that I disagree profoundly with the noble Lord, Lord Dykes, but I shall do him the courtesy of telling the House why.
	Only my noble friend Lord Sheikh and I in this debate so far have no passionate commitment to Europe, and certainly no commitment to the euro. This is no surprise. It was clear from our handling of the European constitution last year that your Lordships' House has a pro-European bias at present. I have no problem with being in the minority in flying the Eurosceptic flag this evening. I know that your Lordships' House is not representative of the British people on Europe, which is of course why the Government could not risk sticking to their commitment to a referendum on the constitution.
	I take great comfort in the fact that, particularly on the euro, my noble friend Lord Sheikh and I can speak for the British people. The latest poll, carried out by ICM for the BBC at the turn of the year, showed that 71 per cent opposed euro entry and only 23 per cent were in favour. That is not an isolated poll. There has never been a poll that showed a majority in favour of euro entry.
	The Government announced in 1997 that, while they were in principle in favour of joining the economic and monetary union, there had to be a clear and unambiguous economic case for doing so. As we have heard, to that end the then Chancellor unveiled the famous five tests. Those tests were not passed either in the back end of the 1990s or in 2003.
	The Chancellor has not initiated a further examination of the tests since 2003, and it would be a complete waste of public money to do so. The 2003 examination resulted in a boxful of reports which was too heavy for me to carry from the Printed Paper Office without the assistance of the Attendants. I never read them all, and I would wager that most of this mountain of paper had a limited readership; though I see that the noble Lord, Lord Newby, deserves a medal on that score. If only for the sake of our environment, we hope that the Government will sacrifice no more forests in the name of the euro.
	We were concerned that the tests would be used as a fig leaf to cover the evident desire of some Labour politicians, not least the then Prime Minister, to take us further into Europe. All of the tests have a high degree of subjectivity—I will not be quite as rude about them as the noble Lord, Lord Dykes, was. Our concerns were increased when the Government announced in 2003 that we had made significant progress towards sustainable convergence with the eurozone economies. We did not believe then that sustainable convergence could be detected on any reasonable analysis. Indeed, the 2003 assessment said that we were more convergent than some of the euro members were prior to the start of the euro, and more convergent than they were in 2003. We felt that that was absolutely the wrong approach. It is well known that, in the political enthusiasm to get the euro off the ground, the politicians conspired to cover up some of the blatant differences in economic convergence before the launch of the euro. They were not truly convergent then, and it is hardly surprising that they have remained non-convergent. The fact that we appeared to be more convergent than some of them in 2003 was neither here nor there, because they themselves were not in a relationship of sustainable convergence and never had been.
	I do not think that anyone would suggest now that our economy had sustainable convergence with the eurozone economies. The harsh facts of the current recession show that the boom and bust economic policies pursued by this Government have meant that we are suffering a more rapid and deeper recession than our European neighbours. Yesterday's IMF report was further proof of that, if more were needed.
	The recession has demonstrated that the eurozone has not promoted or nurtured convergence. We only have to look at Ireland to see that the eurozone was quite capable of fuelling an extravagant economic boom and an even greater bust within its confines. The wonder is that the euro is not already fractured, but that story may yet unfold. The noble Lord, Lord Newby, is wrong that there are no crises in countries such as Greece. There may not obviously be currency crises, but they could well result in countries such as Greece having to quit the euro and thus become currency crises.
	The Maastricht treaty set out the convergence criteria for entry into the eurozone. I cannot say that my party is proud of the treaty overall, but we are certainly proud of the opt-out from the economic and monetary union that we insisted on. Without that, our economy would have been even more bust than it actually is, but I shall return to that in a minute. The UK does not currently meet the convergence criteria as the ECB, in a statement of the blindingly obvious, pointed out this month. We have an unstable and weak currency, wildly fluctuating inflation and, as we debated earlier this week, we fail spectacularly the tests of the general government budget deficit being below 3 per cent and gross general government debt being below 60 per cent.

Lord Lea of Crondall: My Lords, quite apart from the fact that there is a very good analysis by William Buiter in his booklet, which I hope that the noble Baroness will read, surely, it cannot be argued on the one hand that we have a fluctuating currency, which is why we are not tucked in as a suburb of Frankfurt, while on the other refusing to contemplate being in such a position.

Baroness Noakes: My Lords, the noble Lord will be aware that we need a stable currency as one of the preconditions to enter into the eurozone. I was merely making the point that we are far from being ready to even contemplate entry should we want to. I was also making the point that we would fail not only on the grounds of inflation and currency, we would also fail on the test of the Maastricht criteria in relation to the budget deficit and in relation to Government debt.
	In the forecast horizon set out in the PBR up to 2014, we never get back within those parameters. It would be a big surprise, and extraordinarily stupid of the eurozone, if the UK was invited to join the economic and monetary union for many years yet. Even if we temporarily converged with the eurozone economies, it is unlikely to be sustainable because our economy is more linked to the dollar than to the euro—as the analyses of our trade show—and we trade more outside the eurozone than within it. That has been a consistent pattern and those features are unlikely to change when we emerge from this recession.
	So, I hope that the issue of joining the euro is firmly off the agenda for the current Government. If, as I fervently hope, my party forms the next Government it will most certainly be off the agenda for as long as we hold power, as my noble friend Lord Sheikh has already said. That leaves the question of whether we would have been better off in the current recession if we had joined the eurozone at the outset. President Barroso told French radio that some British politicians had told him that Britain would have been better off had we been in. There are perhaps no prizes for guessing which newly ennobled Secretary of State he was referring to.
	We are clear on this question too. The one-size-fits-all interest rate policy would have fuelled an even bigger boom than the current Prime Minister engineered. It follows that the ensuing bust would have been even greater and would have made our recession look like a teddy bears' picnic. What we see in Ireland would have been magnified many times over. We had a very lucky escape by not being in the euro.
	One of the things that the Labour Government got right over the past 10 years was to keep us out of the economic and monetary union, and I hope that the Minister will confirm this evening that there is no practical prospect of us joining in the near future. But in the unlikely event that some crazy integrationists in Europe, and indeed in our own country, get together to try to lure us in, I hope that the Minister, despite the calls we have heard today, will reaffirm the Government's commitment to holding a referendum in order that the British people can decide.

Lord Myners: My Lords, I congratulate the noble Lord, Lord Dykes, on securing the debate today on the prospects for the United Kingdom's membership of the single currency. I also thank him for his kind and yet undeserved opening remarks about me. He is a true hero to his cause. There is no risk of a veil of omerta being pulled over the euro while the noble Lord is here to lead the debate and the cause. His Question asks whether the Government,
	"will undertake an analysis of the prospects for membership of the euro".
	Such an analysis would amount to a reassessment of the five tests. We have heard a number of interesting and well-informed points and I welcome the breadth of discussion and the interest expressed. I will do my best to address all the points raised, and I shall start by outlining the Government's approach to membership of the single currency and the five tests assessment that was made in 2003.
	The Government's policy on membership of the single currency is unchanged.It remains as set out by the previous Chancellor in his Statement to the House of Commons in October 1997, and again in the Chancellor's Statement on the five tests assessment in June 2003. The determining factors undermining—I am sorry—underpinning any government decision on membership of the single currency is the national economicinterest and whether the economic case for joining is clear and unambiguous, as set out by the famous five economic tests.
	When the five tests were last assessed in 2003, the Treasury found that a clear and unambiguous case for UK membership of EMU was not made and that a decision to join at that time would not be in the national economic interest. In the event of a future assessment supporting UK entry to the euro, this decision will be taken—here I answer the question posed by the noble Baroness, Lady Noakes—only if the Government andParliament agree that it would be in the UK's best interests. The UK would then join the euro if the public voted "yes" in a referendum.
	The five tests remain the foundation for determining whether the economic case for joining is clear and unambiguous. They relate to sustainable convergence between Britain and the economies of the euro area; whether there is sufficient flexibility to cope with economic change; the effect on investment; the impact on our financial services industry; and whether it is good for employment. The 2003 assessment found that the only test that was fully met was the test relating to the financial services industry. For the test on sustainable convergence to be met, it was determined that further improvement would be required in regards to the convergence of business cycles and economic structures. In regards to the flexibility test, it was found that while considerable progress had been made to reform labour, product and capital markets in both the UK and the euro area, more remained to be done. Finally, the assessment found that both the test on the effect on investment and the test on whether euro membership would be good for employment would be met if we achieved sustainable and durable convergence. The conclusion to the 2003 assessment of the five economic tests was that,
	"on balance, though the potential benefits of increased investment, trade, a boost to financial services, growth and jobs are clear, we cannot at this point in time conclude that there is sustainable and durable convergence or sufficient flexibility to cope with any potential difficulties within the euro area".
	Following the 2003 assessment of the five tests, a reform agenda was established which would contribute to achieving sustainable and durable convergence, which was right for Britain's economic interests. I shall come back to that point in a moment when I refer to the observations of my noble friend Lord Lea.
	The 2008 Budget reported on the progress of the Government's reform agenda. It set out measures to address supply and demand in the housing market and measures to enhance the flexibility of labour, product and capital markets. These measures will contribute to achieving sustainable and durable convergence in due course.
	Since mid-2007, the world's economies have been hit by major global shocks. This is a global problem which started in the United States of America and then spread across the rest of the world, infecting banks in almost every major jurisdiction. The UK has been no exception. As the Pre-Budget Report set out, short- and medium-term growth prospects in the UK remain subject to exceptional uncertainty, and exchange rates have been displaying high levels of volatility, which is of course to be expected in today's economic climate and financial market shocks.
	In the light of recent events, some commentators are questioning whether the UK downturn would have been less severe had we joined the euro in 2003. Based on the 2003 assessment, we know that there are both advantages and disadvantages of being outside the euro area. We also know that the key for assessing whether it is in the national economic interests for the UK to join the single currency is whether there is sustainable and durable convergence.
	In regard to the current crisis, it is clear that being a member of the euro area would not have been a panacea. Like the rest of the world, the eurozone has been affected by crisis. Based on the European Commission's latest forecasts, real GDP in the euro area is forecast to fall further. Output is forced to contract in all of the four big euro area member states: Germany, France, Italy and Spain. In the face of the current crisis, the European Council has agreed a EU economic recovery plan based on a fiscal stimulus equivalent to 1.5 per cent of European Union GDP. This plan provides a coherent framework for action while recognising that measures taken by each member state need to be tailored to national circumstances. The plan encourages member states to allow borrowing to rise to support the economy, acknowledging that this would lead to a deepening of deficits in the short term. The recovery plan is consistent with the measures taken in the UK, including the fiscal stimulus announced in the 2008 Pre-Budget Report.
	As I said, this is a global crisis that will require a global solution, and the UK will continue to work closely with partners to maintain a co-ordinated approach to secure solutions. The European Union is a vital partner in these matters and the European economic recovery plan is a bold step in taking co-ordinated action to respond to the crisis and the economic downturn to the benefit of citizens in the UK, the EU and internationally.
	It is the Government's policy to consider annually whether to undertake a new assessment of the five tests. While the Government did not propose a euro assessment to be initiated at the time of Budget 2008, the Treasury will again review the situation at Budget 2009. At any stage, a new assessment of the five tests would require a full and vigorous appraisal to arrive at an informed conclusion. These considerations will extend far beyond the current value or volatility of sterling and other implications of the current crisis. Sustainable and durable convergence is the key pre-condition for realising the potential benefits that euro membership offers.
	The development of the UK economy following the introduction of the Government's monetary and fiscal policy frameworks since 1997 shows how stability has provided the foundation for long-term improvement in the UK's economic performance. This demonstrates why the Government's decision on euro membership focuses on what is right for the UK economy in the long-term. I think, therefore, that the heart of my answer to the noble Lord, Lord Dykes, is that it is a matter of timing. The Government's policy is to seek to join the euro, but only when they believe that the conditions are right.
	I have read with great interest the booklet 10 Years of the Euro, to which my noble friend Lord Lea and the noble Lord, Lord Taverne, referred. The then Chancellor of the Exchequer said in 1998, in an article or a speech reported in the booklet, that it was appropriate not to wait and see but to "prepare and decide". That is precisely where we are. We continue, as a Government, to follow policies designed to secure convergence and to achieve the satisfaction of the five tests.
	My noble friend Lord Lea also referred to the excellent article in the booklet by Mr Willem Buiter. My noble friend's own worthy contribution also deserves mention; the article is entitled:
	"Let's Save the Pound—Make it the Euro-Pound".
	These are decisions of great significance. It is good that a national debate continues on this subject and that intellectual and academic minds are applied to these issues.
	The matter of timing is extraordinarily difficult. As the noble Lord, Lord Sheikh, said, 10 years is not a long time in the history of currencies. Getting this judgment right is critical because, once it has been made and a decision to apply has been accepted, we are then into the euro at the rate of exchange fixed at that time, and we are in for ever. This is not a decision that can be taken after anything less than the most thorough analysis, national debate, full consideration by Parliament and full support from the nation, as secured by a referendum.
	The noble Lord, Lord Dykes, referred to the risk of the pound and contrasted it with euro-denominated bonds. I remind noble Lords that the credit rating agency Standard & Poor's recently reaffirmed sterling as an AAA long-term and A1 short-term credit rating in the United Kingdom, its highest ratings. Those have also been endorsed by the other two major rating agencies, Moody's and Fitch. As Standard & Poor's said, the status of the British pound sterling as a major global funding currency, combined with strong demand for long-dated gilts by domestic institutional investors, is expected to provide funding flexibility for the UK Government during the heavy sovereign issuance expected to flood international debt markets in 2009.
	I should like to pick up a point on fluctuations in the exchange markets. Were the UK to join the single currency at any time, it would seek to lock in at a sustainable exchange rate consistent with the long-term trend valuation of the pound against the euro. This would make adjustment to the new currency as smooth as possible and reduce the risk of a negative impact on inflation or growth. The question of when to join the euro rests on far more than simply the current value of sterling. There may be a certain elegance in saying that, if we join at parity, that would make it simpler for people to understand, but the decision is of far greater significance than that.

Lord Lea of Crondall: My Lords, I was not contending that it is simply a matter of elegance, though there would be the advantage that people could understand it. Much of industry thinks that parity or thereabouts may well be a sustainable rate.

Lord Myners: My Lords, I am sure the House is grateful for that clarification.
	The noble Lord, Lord Sheikh, who has a distinguished career in finance, asked me to "clear up this mess" and state the Government's policy after the "confusion" of recent weeks. I am pushed to understand the confusion of recent weeks to which he referred; indeed, if I see confusion at all, it is possibly on the Conservative Front Benches with the arrival of Mr Kenneth Clarke. However, I hope that my comments, which have restated the Government's policy on the euro for the past 10 years, will have set aside any anxiety or confusion that he may have. Those comments were confirmed by the noble Lord, Lord Taverne, in his observation that the Government are clearly committed to joining the euro at the right time and according to the right circumstances.
	The noble Lord, Lord Newby, made a typical contribution. I admire his ability to distil complex issues into straightforward and logical statements. He serves his party well in summarising its position on the euro, and where he finesses his party's formal position compared with that of his noble friend, he does so with elegance and some conviction. I was delighted to hear him refer to the status of Ireland and the Irish economy. I have no doubt that he will speak to his colleague, the noble Lord, Lord Oakeshott of Seagrove Bay, who clearly has a different view about the economy of Ireland.
	The noble Lord, Lord Newby, said that we were losing our ability to influence European institutions by not being in the euro. I recollect that the noble Lord, Lord Taverne, made similar observations. There is no reason why our voice will not be heard in Europe because we are not a member of the euro. The ECOFIN council takes decisions on economic and financial matters, and all the EU's 27 member states are members of it. There is a smaller group that meets to discuss matters relating to the euro, but it is informal, and ECOFIN and the European Council, of which we are a full member, take decisions. It is quite clear that the huge respect which the Prime Minister and the Chancellor of the Exchequer enjoy throughout Europe will mean that their views are always welcome in any European discussion related to economic and financial management.
	The noble Baroness, Lady Noakes, clearly stated her party's position, echoing the views of her colleague, the noble Lord, Lord Sheikh. We had another little digression about a "bust" economy, and I do not doubt that if we had been allowed more time we would have heard about the "broken society", as the Conservative Party takes joy in the problems that the global and UK economies face. However, at the heart of her observations was an acknowledgement of the importance of convergence regardless of the conclusions that one draws; that is, that if one is going to join the euro, convergence is critical. That is at the heart of the five tests. While the noble Baroness and I may disagree on where one is likely to end, we are in agreement on the importance of the tests and processes.
	I thank the noble Lord, Lord Dykes, for initiating the debate. It has been a most informed discussion. The noble Lord has given me a good opportunity to restate the Government's policy.

House adjourned at 7.19 pm.